Koscot Interplanetary

Koscot Interplanetary, Inc. was an Orlando, Florida based multi-level marketing cosmetic company selling mink oil-based cosmetics. It became entangled in numerous legal difficulties and went out of business in the 1970s.[1]

Koscot Interplanetary (Koscot stood for Kosmetics for the Communities of Tomorrow) was started in 1967 and was owned by Glenn W. Turner Enterprises, Inc. which also owned a sister company called Dare to be Great, Inc. (started in 1969). Dare to Be Great provided motivational and self-improvement courses, and also functioned as a multi-level marketing company.[2] All the companies were owned by Glenn W. Turner, a former sewing machine salesman. Turner had also briefly worked for Holiday Magic, another multi-level marketing company that sold home-care products and cosmetics, and through related companies sold self-improvement programs. Koscot and Dare to be Great grew rapidly and Turner became famous, appearing on the cover of Life Magazine[3] in 1971, at which time he was worth a reported $300 million.

The premise of Koscot was that participants could sell cosmetics door-to-door or at parties. However, the focus of the company was more about selling distributorships than cosmetics. Participants could pay $2000 to be a supervisor or $5400 to be a director. These levels could make money by getting commissions from recruiting other participants to be supervisors or directors, and getting commissions on orders of cosmetics from other recruited participants.

Koscot became involved in substantial litigation from government agencies and Koscot's customers.[4] In 1971, the Federal Trade Commission filed a lawsuit against Koscot, charging restraint of trade. The Securities and Exchange Commission also filed a lawsuit in 1972 charging that Koscot's program should be considered a security and comply with securities laws and regulations.[5] The FTC's decision on Koscot set a precedent for defining if a company is engaging in illegal pyramiding.[6]

In 1973, Turner, attorney F. Lee Bailey and eight others were indicted by a federal grand jury on conspiracy and mail fraud charges.[7] The indictment said that Bailey had appeared in a film made for Turner's organization and had appeared with Turner at several rallies. A nine-month trial ended in a hung jury. Charges were then dropped against Bailey. In 1975, Turner pleaded guilty to a single charge of violating securities laws and was given probation. Turner ran in the Democratic primary for the United States Senate election in Florida, 1974, but lost. He later operated another motivational company called Challenge, Inc., which led to more legal difficulties. In 1987, Turner was convicted, along with Edward Rector, on charges of conspiracy, fraud and operating a pyramid scheme, and sentenced to seven years in prison.[8]

References

  1. ↑ Still a Salesman, And Motivated New York Times July 4, 2004
  2. ↑ Dare to be Great, Inc!: A Case Study of Pyramid Sales Plan Regulation. Cochran, Harry M., Jr. Ohio State Law Journal: Volume 33, Issue 3 (1972)
  3. ↑ Dare to be Great by Thomas Thompson LIFE Magazine May 28, 1971 p68-78
  4. ↑ Koscot Cosmetics Accused Of Illegal Business Actions New York Times March 18, 1972
  5. ↑ Koscot and Turner Cited in Complaint Filed by the S.E.C. New York Times September 14, 1972
  6. ↑ FTC - Pyramid Schemes - International Monetary Funds Seminar on Current Legal Issues Affecting Central Banks - Washington, D.C. -Date: May 13, 1998
  7. ↑ Turner, Bailey Face Conspiracy Charges The Dispatch May 19, 1973
  8. ↑ Glenn Turner -- Out Of Luck; Fraud Sentencing May Be His Day Of Reckoning Orlando Sentinel August 17, 1987

Further reading

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