[upbeat music playing]
Uh, Lindsey, what do you say to people when they say we are a pyramid scheme?
Quick answer.
We're not a pyramid scheme. My husband thought we were at first.
He told me I was gonna share a cell with Bernie Madoff,
'cause he was convinced that there was no way
that I could make this kind of money doing something legally.
So, of course, I had to prove him wrong.
So I have the biggest skeptic right in my house next to me.
The reason we are not a pyramid scheme is because in a pyramid scheme,
you have to keep signing people up to make money
because the product is not of value.
[Becca] In 2017, LuLaRoe changed the bonus checks.
They changed how these bonus checks were working for the uplines.
Your bonus checks are switching from purchases.
Oh, the bonuses are based on actual sales.
Sally needs to sell in order for you to get a bonus check.
[attorney] Are you aware that LuLaRoe changed its bonus plan in June of 2017?
Yes.
[attorney] What was the change?
That, my understanding is, that it would be
based on sales versus ordering.
When the bonus structure changed, my check dropped in half.
Did our check go down?
[chuckles] They cut those in half.
My bonus checks went from like $6,000 to like $800.
-We've always been planning this. -[Lindsey] Yeah.
We've talked about it for the last year.
We need to get away from being a pyramid scheme, okay.
So that, that takes that last piece off the table
of anybody being able to say that we're a pyramid scheme.
So, the way we get away from a pyramid scheme
and incentivize you as leaders, is we change it.
[theme music playing]
[Courtney] In 2017, LuLaRoe was changing a lot.
The complaints were rolling in.
And people were posting, "Is this a pyramid scheme?"
[Becca] LuLaRoe was making a change.
Because at that point in time, some of the nuts and bolts
about how they operated the business potentially make them more liable
for claims that they are a pyramid scheme.
[Courtney] First, they changed the bonus checks.
And then, you know, there's a question about
did LuLaRoe have a proper return policy.
So LuLaRoe implemented a 100% buyback policy.
Basically, for anyone that wanted to get out of LuLaRoe,
you could send back your inventory
and LuLaRoe would send you a check for 100% of the wholesale cost.
[Roberta] I think originally it was put in place
to encourage more people to onboard
and to quelch some of the fear that people had
because joining LuLaRoe cost a couple thousand dollars.
[Derryl] In the original correspondence,
it says, "This policy has no expiration date."
[Courtney] They told us on the mentor call
that the buyback policy was never going away.
We did as we were told.
We disseminated that information down to our teams.
Two different things happened.
One, a bunch of people that were on the fence with LuLaRoe joined.
That whole if-you-can't-sell-it thing was gone.
The other thing that happened was a mass exodus.
I lost probably 20 people within two weeks.
The great exodus. [laughs]
A lot of people took advantage of this program
to go ahead and get out of LuLaRoe.
[Roberta] I believe LuLaRoe paid over a hundred million dollars
in refunds during that time.
[attorney] Currently, what is LuLaRoe's policy
with respect to returns of merchandise from retailers?
[sighs] You know, that's something Mark takes care of, I don't do that.
[attorney] If an IFR leaves, they can still submit
-qualifying products to return? -Yes.
-And damaged products to return? -Yes.
-Has that always been the case? -Yes.
Subject to the policies and procedures.
September 13th of 2017 is a day
that I will keep in my mind,
probably until the day I die.
On that day, I found out LuLaRoe said,
"You know that 100% buyback guarantee that we gave you?
Yeah, that, that's not gonna happen."
[Courtney] A couple months after the buyback policy was implemented,
there was an emergency mentor call.
They told us the 100% buyback program was done with.
[Roberta] It is going back to the original policy
with an additional stipulation of all kinds of things.
You couldn't return anything that was seasonal or elegant.
Everything had to be in the original packaging
with the tags and they said anybody that was a leader
wasn't gonna get anything refunded until the bonuses had been removed.
So, no, leaders can't return inventory until their bonuses are paid.
I've got so, so much stuff, it's, like, insane.
I have at least $15,000 worth of inventory.
I could get no refund.
I'll never forget this one lady who called me and she was like,
"LuLaRoe, you should be ashamed of yourself."
And she was crying during the entire call.
Right after the buyback policy,
I went to the bathroom and had my breakdown.
And then I thought to myself,
"Am I really helping people like I thought I would?"
As I got through crying, the answer to that question was no.
If I was helping anybody, it was Mark and DeAnne
accumulate more money they didn't have to answer for.
[Roberta] I decided to leave LuLaRoe.
Because I could not stand and hear my team saying,
"I might have to go into foreclosure on my house
if I can't get this refund for this inventory
because I'm two months behind on my mortgage payment
and I'm gonna lose my house."
I went into a really deep spiral of, like, depression and anxiety
from being in this company.
A lot of realization that I had been a part of it.
That I had been predatory.
You know, people say things like, "You couldn't do it."
Or, "You, your sales were dwindling at the end."
My sales were dwindling at the end because
I didn't want to do it anymore.
I didn't want to be a part of the... the bullshit.
I sat down on my iPad, and I typed out this long, like, diatribe
of like, "This is why I'm leaving."
I thought, "You know what, if I put it on social media, and it's public,
then that's the end, right?
Like, I'm gonna post my resignation letter on Facebook.
I'm going out of business."
I was like, "Oh, my God, it's out there."
[newscaster 1] Former and current LuLaRoe retailers and customers
are flooding social media with complaints.
[newscaster 2] Consultants all over the country
have now taken to social media...
[newscaster 3] Hundreds of other women online
say they too are waiting for their refund.
We're told the accounting department doesn't have phones.
[newscaster] Many women who have bought into the program
are going to be left thousands of dollars in debt
all thanks to a new policy.
Something just went viral.
And to this day for me, I don't understand it.
All of a sudden, they all just ran off, kind of, you know.
And it was like, "No, no, no, no, no. Wait, what's going on?"
You know, and that's heartbreaking.
No one in the fucking world wants to wear leggings
that feature a bee crawling up your cooch.
[audience laughs]
I just, I wish there wouldn't have been the negativity.
The only time it's acceptable to say "we don't want smart people"
is in the training manual for selling LuLaRoe.
It's so unnecessary.
LuLaRoe ended its make good refund program on July 31st.
The company says it's still processing the remaining claims.
One woman tweeted: "LuLaRoe, hope you are ready for a big lawsuit.
Withholding approved refunds is illegal."
[Kelly] I grew up in New Jersey, born and raised.
First one in my family to go to law school.
When my daughter was about five years old,
she met her first male attorney, ever.
And when she asked him what he did for a living
and he said that he was a lawyer, she laughed
'cause she thought only...
I believe she said, "Mommies and girls are lawyers."
The way I found out about LuLaRoe was actually
through some of the moms in the neighborhood.
I met Kelly by coincidence.
[Kelly] We were both involved in local networking groups.
Mostly for moms that were business owners, entrepreneurs,
professional women supporting professional women.
She called me and said, "Do you do class-action work?
I think I need a lawyer."
She had about $20,000 worth of inventory.
And when she tried to return them, she, she couldn't.
[Stella] In December of 2016, I found out I was pregnant.
But when I was almost five months pregnant,
I lost the baby.
I felt so alone.
And so ashamed.
There's something wrong with my body
that I would lose the child.
There's something wrong with me as
a salesperson and entrepreneur,
that I couldn't make it work.
They confirmed my 100% return of my inventory
in June of 2017.
Some may say, "Stella, why didn't you hurry up
and package your stuff as soon as you resigned?
Why didn't you put your stuff in boxes
and just ship it along the way?"
Well, my post-partum depression became extremely severe that summer.
Every time I sat in that pile of clothes,
try to label and count it, I cried.
So, no, I didn't do things quickly and properly.
But when I did,
I was left with approximately $20,000 worth of inventory.
[Kelly] Her story was just so compelling
and I started to investigate,
started reaching out to other people
and it was just the kind of thing that,
that you can't walk away from.
So I took it on.
This case really started as a breach of contract.
LuLaRoe announced that they had a 100% buyback program,
which is risk-free.
"Buy what you want, it's not going anywhere.
If you don't want to sell these leggings anymore,
we'll pay the shipping, give you your money back."
And then they decided, overnight, "We're not going to do that anymore."
LuLaRoe said that it was only a temporary policy,
but there were a lot of recordings
and information distributed to these women
saying the 100% percent money back guarantee is not going anywhere.
Very simply.
"You promised if we didn't want to sell this stuff anymore,
there was no risk.
You broke your promise."
We started digging.
A flood of information came in.
The women out there were just hungry to tell their story.
We'd set up a website to gather information
and see who else was out there.
And the response was mind-blowing.
You know, these were people that were desperate
for someone to stand up for them,
and they just didn't know where to go.
We went out to California.
We filed the case, and we said,
"Not only is it for these women,
they're also standing up for everyone else that you did this to."
[newscaster 1] The new class-action lawsuit alleges
the buyback guarantee...
[newscaster 2] ...as easily as wet toilet paper.
...class-action lawsuit accusing LuLaRoe of being a pyramid scheme.
We sell product through to a consumer.
And it's highly desirable product.
That is not a pyramid scheme.
[newscaster] The company is accused of encouraging some retailers
to borrow money, take out credit cards, some even sell their breast milk.
There's always two sides to every story, but anytime anybody asks you to sell
your breast milk, I think I'd have some questions.
I'd think twice about that one.
Always find the most interesting detail in the story, Gayle.
[Gayle] Well, that sort of jumped at me.
[Becca] I stopped trying to keep track of how many lawsuits
had been filed against LuLaRoe.
It's dozens.
The first defective leggings lawsuit was filed,
and quickly there were a number of other lawsuits
filed in other states.
LuLaRoe was sued a whole bunch of times
for copyright infringement.
People started doing Google Image searches
on artwork on LuLaRoe's leggings.
[Iliana] We were instructed from the beginning,
if I'm going to take something, a piece of art from Google,
wherever we sourced it from,
you had to take a little piece from it
and then change that little piece at least 20%.
In order to not, you know, get sued or whatnot.
But some designers didn't...
didn't really... abide by those rules, I guess.
A lot of it seems to have not been created by LuLaRoe.
[Iliana] The demand was so, so insanely, unrealistically high
that it forced some of our designers
to rip off some other artists.
Just to meet the number.
I would just periodically check to see if there were new lawsuits.
And in late November of 2018, I got wind of something.
The MyDyer lawsuit was the first lawsuit
that just called Mark and DeAnne scammers essentially.
MyDyer is a supplier of clothing.
[Becca] MyDyer claimed that LuLaRoe owed them $49 million.
And one of the claims that they're making
is that LuLaRoe knew that they would not be able to pay those bills.
And they placed new orders with MyDyer anyway,
essentially with the intention to defraud MyDyer.
[Aine] The lawsuit between MyDyer and LuLaRoe,
it's not just a lawsuit, it's also a rift between two friends.
Mark Stidham became friends
with MyDyer CEO Daniel Kang.
-[DeAnne] Dan from MyDyer. -Hello.
They're bros.
[laughing]
Kang, like Stidham, is a huge lover of luxury cars,
and they both fell into this clique
known as the Ghost Squadron.
[car engine revs]
They are men in California who own Koenigseggs,
a very fancy Swedish car that goes very fast.
They actually appear together in a car throttle documentary.
Mark Stidham, he's just a real down-to-earth person.
He's the token patriarchal, tell us the stories of the old days,
and that's what keeps the humor within the system.
[Aine] Where this falls apart
is once you start having quality issues
with the LuLaRoe products,
this starts some really nasty infighting
between MyDyer and LuLaRoe.
MyDyer made allegations that LuLaRoe
were hiding money in LLCs because they knew
litigation was on the way.
In fact, the company is tied to dozens of LLCs.
Seventeen LLCs were set up in December 2017 alone.
[Becca] LuLaRoe is counter-suing MyDyer.
They are claiming that, "No, we don't owe you money.
You owe us money."
[Aine] Basically, it's turned into that meme of Spider-Man pointing at himself.
It's just a hot mess.
[Courtney] This whole situation, it was surreal.
It took a huge emotional toll on me,
and I decided at that point that the fight was no longer worth it.
I sent in my letter of resignation.
I thanked them for the opportunity,
but just said my values no longer aligned with theirs.
[interviewer] So how much money are you owed by LuLaRoe?
Today, if you take the incorrect bonuses,
the returns, the defective items,
I'm owed approximately $100,000.
After I left, everyone was told not to talk to me.
To have no association with me or they would be terminated.
When someone left LuLaRoe, you were not to communicate with them.
So it wasn't until I left LuLaRoe
that Sam reached out to me.
Sam actually contacted me when I left LuLaRoe,
to invest in his marijuana business.
I asked him, "Is there some type of agreement
for a guaranteed return if I put in $30,000?"
He said, "Hahaha, no agreement.
But hey, let's do the $30k, yah?
You'll get $90k back, yo."
And then he sent me a picture of all this money
and sent it to me.
I knew that something just wasn't right.
And then I did a reverse screen shot on the image
he sent me of the dollar bills,
and found it on Google.
So it wasn't actually his money.
He had stolen a screenshot from Google Images.
I was investing in what I believed to be a marijuana farm.
It ended up being fake.
[Newscaster] According to charging documents,
the Utah County Attorney's Office says Samuel Schultz
made promises of profits from Marijuana Grow Operation,
a pot farm that never existed.
[Sam] It was a Ponzi scheme.
I didn't keep anyone's money.
I had my own money into it, so.
You can't make up these stories.
[Tiffany] That summer of 2018,
it had just become a circus.
It had become something that it wasn't supposed to be.
[piano music playing]
[Derryl] For convention 2018,
LuLaRoe spent so much money on Kelly Clarkson,
when they owed many retailers money.
And they made so many retailers go through
all these hoops to get their money back.
And yet they had that to spend on Kelly Clarkson.
Honestly, to this day, I will not listen to Kelly Clarkson at all.
I am full-on boycott.
Which is sad, because I loved Kelly Clarkson as a singer.
I love that duet with Jason Aldean, Don't You Wanna Stay.
That's one of my all-time favorite songs
and I can't listen to it anymore because of her.
[Paul] Right after Kelly Clarkson, that's when we had the infamous meeting.
They had a meeting with people who were high-profile
and Mark basically threatened us.
They had us put on a piece of paper an X or an O
if we were all-in with the company or not.
And then hand the papers in.
[Paul] They had us raise our hands, in public,
if we were in for the company long-term or short-term.
Just very awkward.
There were always questions,
and for the most part, up until that point,
they had been able to explain everything away.
Well, now there were questions that they couldn't answer.
And it was absolutely unacceptable to question Mark.
So, one Monday morning, after convention,
we got an email that said somebody in the company
that's a high-profile person was terminated.
And we were like, "Oh, my gosh."
We're like, "Who was it?"
We're calling everybody on our team,
we're like, "Did you get terminated? What's going on?"
The next thing I know, I went to go check the email
and sure enough, about four hours later,
we were privately sent an email that said
it was actually us that was terminated.
We were stuck with all of this inventory.
We tried to sell some of it. We gave most of it away.
We just took a massive loss.
[newscaster] Tonight, the company LuLaRoe
facing another lawsuit.
The Washington State attorney general says
LuLaRoe tricked people into joining a pyramid scheme.
[Becca] In early 2019, the Washington State attorney general
filed a civil lawsuit accusing LuLaRoe
of violating Washington State law
regarding pyramid schemes.
This was huge.
The lawsuit claims that you essentially
could not have a successful business
just selling the product.
That the primary way people involved with this company have success
is if they recruit people underneath them.
And that's a pyramid scheme.
[Ashleigh] When I started with LuLaRoe,
the compensation plan was based on wholesale orders.
So at that point, I mean,
it doesn't really matter which way you present it.
That is the definition of a pyramid scheme.
That's, like, really weird for me to say out loud.
[interviewer] And the Washington State lawsuit--
that's your home state.
Mm-hmm.
[interviewer] What do you know about that?
I just, I don't know enough about it,
and that's a big thing.
That's a big lawsuit.
-[interviewer] Yeah. Okay. -Yeah.
[interviewer 2] It's one thing when people file civil suits.
Is it a little scarier when a state files a suit against you?
Can I tell you right now that my tongue is bleeding?
[laughs]
Because I would like to tell you what I think
about that suit in real terms.
My attorneys, if they were sitting here,
they'd probably tell me to shut up right now, but, um...
As part of the case, they've had hundreds of thousands
of pages of discovery exchanged.
DeAnne was deposed with the title of president.
Mark Stidham was deposed with the title of CEO listed.
Kenny Brady, vice-president of sales for LuLaRoe.
And we welcome you to LuLaRoe.
We're excited that you're a part of this company.
[attorney] Can you tell me what the "make good" program is?
I don't recall.
We create freedom. We serve others. We strengthen families.
[attorney] Do you recall what the Happiness Policy is?
I don't recall.
Where dreams are achieved. Your lives are blessed.
We do it through love, confidence, purpose, trust and growth. Oh, my gosh.
[attorney] Did the "make good" program have to do with
addressing defective product?
I don't recall.
Jordan Brady, the former head of leadership and culture.
[attorney] What was your understanding of what a pyramid scheme was?
I don't remember what my understanding
of a pyramid scheme was at that time.
We need to get away from being a pyramid scheme.
[attorney] Did you review this video in preparation for your deposition?
Yes.
So, the way we get away from a pyramid scheme
and incentivize you as leaders,
is we change it.
So, you have to put those comments in context.
And you also need to know my son, Jordan.
You'll love him.
-When you meet him. Poor kid. -And Jordan has
-a tremendous amount -Such a...
-of enthusiasm. -Yes, he's such... He's so fun.
[Mark] Most of us are not always precise with language.
And so, a thing that he said,
that he thought was clarifying a safe harbor,
actually sounded like we were afraid that we weren't safe to begin with.
We never were, never have been a pyramid.
And we're not a pyramid today.
Every dollar made in this business is made by people selling product.
Jordan hasn't done anything that
he should be worried about, nor have we.
[attorney] What about LuLaRoe is different, in your mind, from MLMs?
Our IFRs purchase product from us.
We're a wholesale supplier to them.
The majority of their income is derived
from selling that product to an end user.
The Washington State attorney general's case
put together a handy graphic.
This is how much was being made in bonuses,
and that is how much was being made in retail profit.
And it's actually slightly negative.
[Courtney] Mark and DeAnne always put an emphasis
on recruitment until we changed to
sales-based compensation structure.
They actually had us write down
how many people we knew, and could name by name,
and they had, like, categories split up into it.
Our goal was to gather as many people as possible.
It was never intended as that kind of
self-perpetuating program where you're
just continually looking for new people in the program.
[Paul] If Mark and DeAnne have ever made a statement that
they put no emphasis on recruitment or team-building,
that is absolute nonsense.
Their whole model was built on team-building.
[recording of DeAnne] Ah, real quick, I want you to know
how much money they're making,
what did they make in their last bonus check,
and what are their sales?
I'm in Riverton, Utah, and our last check was 307,000.
[cheering]
I--I can't even say it. It, like, blows my mind.
And our personal sales were about 18-- little over 18,000.
[DeAnne] I love that. I love that, okay.
[attorney] Why did you ask these retailers
what their sales checks and bonus checks were?
Why not?
I love it.
It's inspiring, and it gives people excitement.
[interviewer 2] So, I mean, when you reach kind of the pinnacle of this whole thing,
you guys, at one of the Vision events,
presented a check for $1.4 million
to a husband and wife.
No, I don't think we did.
[Mark] That, that represented their earnings to date in the company.
[interviewer 2] So that was sort of a ceremonial check.
What was that meant to convey?
It was meant to convey, "Thank you for all your hard work.
Look at how, what they have accomplished."
[interviewer] So how did they earn that much money?
And how long did they work?
[DeAnne] She started doing 16 parties a week.
[interviewer] How long did she do that for?
Oh, my gosh, probably,
well, she still,
I think she did that,
I don't know, two or three years.
Yeah.
[interviewer 2] What percentage of the $1.4 million was her selling
at those parties and what percentage was her bonus
for the people underneath her?
Yeah, that $1.4 million would have represented her bonus checks.
That was, that would have been her bonus checks.
We don't track our retailers' profits.
[interviewer 2] Do you think it's maybe easy to get the impression
that the way to make money at LuLaRoe is to recruit people?
The recognition of huge achievement
is not meant to mislead.
It's meant to inspire.
And if you're misled by it, um, that's on you.
[solemn music playing]
We're not a pyramid scheme.
My husband thought we were at first.
He told me I was gonna share a cell with Bernie Madoff
'cause he was convinced that there was no way
that I could make this kind of money
doing something legally.
[Ashleigh] There are things that I did that I would not do again.
And I'm not saying that I, you know,
committed any crimes, I didn't.
I didn't.
I don't know that I necessarily did anything wrong.
Whether my income came from bonuses or sales,
it really just depended on where, you know, my focus was,
and what I was able to do.
[interviewer] So there were times when
you were bringing in more money
from your sales than from bonuses?
I'm not gonna speak to that.
[Jill D] If LuLaRoe were to be found guilty,
then I feel that every direct sales company
should be investigated as well.
Because I've never seen LuLaRoe do something
that other companies haven't done.
[Kelly] A multi-level marketing company is a legally permissible business model,
if done the right way.
When you have a multi-level marketing company,
you have to follow factors that are set out by the state and federal courts
and the laws of our country that say,
"This is how to do it in a way that's safe,
and people are not just taking advantage of someone
that's trying to make a living."
You have to have a buyback policy.
The 70% rule.
People are supposed to be only buying more inventory
after they sold about 70%.
And you have to make sure that sales are going to
at least 10 different customers and not just
selling to other reps or other distributors
that were trying to make money.
The attorney general in the State of Washington
did research into the LuLaRoe enterprise
and determined that at some point in 2017,
there were significant changes made to the company
and the way they were operating.
What the Washington State case does is says, "That's great.
You changed your practices in 2017 on paper,
but we're going to keep checking to make sure."
[Robert] The State of Washington may be successful
in prosecuting LuLaRoe as an illegal pyramid scheme
under their state statute.
But in reality, successful prosecutions are rare.
Until the government looks at this entire field,
this is political theater.
[attorney] Is it fair to say that LuLaRoe grew at an overwhelming rate?
LuLaRoe grew at an unprecedented, rapid rate.
Not overwhelming, we're still here.
[interviewer] If you could ask Mark and Deanne questions now...
what would you ask them?
Huh.
-Huh. -They're real snarky.
-[chuckles] -Yeah, they're real snarky.
They would lie to you anyway. I don't, I don't have any question to ask them
because I wouldn't even get the, I wouldn't even get the truth.
So I will give you a little bit of my philosophy of litigation, okay?
When you've done something wrong
and somebody calls you to task for it,
you don't see any of those in the public with us, do you know why?
Because I settle them, I take care of it. I own it.
I say, "You're right, we did that wrong.
And we will take care of you. Sorry.
Sorry that you had to sue me in order to get
enough attention to get that handled."
[Stella] In regards to my case, as much as I can say,
it's been resolved by both parties.
At this point, we've gone our separate ways.
And I'm okay with that, because at the end,
my mission was to get a message across.
Just because you're a large company
doesn't mean you can take advantage of people.
The day that I left LuLaRoe, I was still making six figures a year,
but it didn't bring me joy anymore.
After my husband and I separated,
I felt like I had failed to accomplish
what the whole point was
of, like, what I was doing at LuLaRoe
was to, like, strengthen my family.
But if I was to be really committed to my business,
I had to pick one or the other.
[sniffles] I still had the reward at the end of the day, right?
I still had the money to sort of
justify that much time away from my kids.
There are a lot of people who didn't.
Actually, I'll just say this.
I know that the experience that I had cannot be replicated.
I know that now.
I did reach out to DeAnne and she said
that she thought it was sad that I was walking away
from the business that I had worked really hard for
and that she would encourage me
to take my children to church
so that they had a sense of stability in their life.
[Courtney] I had to sell my house.
I had to sell both of the vehicles that I had bought.
I remember them coming to pick up my vehicle,
and my son running out and said, "Mommy, why are you crying?
It's just a car."
And that really spoke to me.
At that point, though, it was a lost cause
between me and my husband.
On the weeks I don't have my children,
I eat cheese and crackers for dinner to save money.
And I'm also having to claim bankruptcy... [sniffles]
for the credit cards that I still owe on.
I'm trying to be non-judgmental.
I was judgmental for the years I was in LuLaRoe
because I thought I was better than everyone else.
Now I realize that everyone has a story.
For any current LuLaRoe retailers,
I hope that they get out before it's too late.
I waited until it was too late,
and I was one of the first to leave.
[Lauren] When I decided to leave, it was kind of 50/50.
There were some people that were super let down and upset
and then a lot of people that were like,
"Oh, yay, we have our friend back."
Or, um, our mom back.
My hope would just be that anyone who was
in that position knows that it's not anything with them.
It's just, like, it's okay.
Some things just don't work out.
[Roberta] Knowing my part in this
and knowing that I got a lot of women into this company,
is something that took me a really long time
to not have pain and tears over.
I don't want anybody to go through what I went through.
Multi-level marketing companies target women, mostly.
Stay-at-home moms, single moms, retired women at home,
people on disability, people of color,
people in low income, people that don't have
the advantages that other people have.
There are so many ways that you can have
legitimate work-from-home business opportunities
that do not require an upline or a downline.
[Becca] The reason that we were so successful
in exposing LuLaRoe and investigating LuLaRoe
was because so many people came together
and shared information.
[Roberta] That's the reason I got into LuLaRoe in the first place
was to create a community.
[Jill F] The women who are fueling LuLaRoe
are the women that in communities
across America run PTAs, that get people to the polls.
That are incredibly effective politically.
They're well-connected in their communities
and they're connected to each other.
And they are one of the most potent and effective,
but completely underrecognized sources of power.
[Becca] This is an example of how women
can come together and expose wrongdoing.
[Roberta] I've found more support in Defective
than I ever found in LuLaRoe.
My main goal when I left LuLaRoe was to help 75 women get out,
because that's the number of people that were on my team.
And in the last three years, I've helped thousands.
Thousands of women.
I'm trying to, like, find the rainbow after the storm, I guess.
This is what happens when you stop caring
about ethics and morals
and are completely consumed by greed.
[LaShae] Do I believe they knew what they were doing?
Yes.
Did they think they were going to be as successful
as they was into doing what they were doing? No.
[Iliana] It was an experience, I'll just say that.
It was stressful and messed up and that's not the way it should be,
but that demand to pump out art, like,
with a gun against my head, you know, at the end of the day,
I could at least say that
it made me a better designer, being there.
Um, would I do that again?
Probably not. Um...
Probably just stick to bartending and graphic design.
You guys should be held accountable,
whether you be sued or whether the story be told.
'Cause remember, you started in the trunk of your car.
So you never forget, you was just selling skirts, sweetheart,
out the trunk of your car.
And then, now look at you.
So the least you could do is show the people
that put you where you are some respect.
[Derryl] I have a vision that one day,
all of us former home office folks
and the retailers that choose to join us,
there's a Miguel's,
you could see the home office from this Miguel's,
the back patio.
I have visions of all of us sitting on the porch,
sipping our beverage of choice--
me, it's cranberry juice and vodka, full disclosure--
and watching the repo men take everything out.
All the computers, the phones, the pictures,
the tables, the desks.
And Mark and DeAnne on the first floor crying,
with federal agents somewhere near them.
Will I get my vision? I hope so.
[Kelly] It is over $4 million that's going to the State of Washington.
The position LuLaRoe has taken publicly
is that they deny any wrongdoing.
They made a business decision to stop the litigation
that has been going on since 2019.
[Jill F] As part of the settlement,
LuLaRoe does have to change some of what the sellers
said were its most egregious policies,
including an updated refund policy.
It's certainly not nothing.
What it doesn't do is overhaul laws around MLMs and pyramid schemes.
[Robert] The thing most people don't realize
is no multi-level marketing company has ever, ever actually stopped.
It's one pulsating, giant,
many-tentacled pyramid scheme out there.
If one happens to fail, it only diffuses out.
The top leaders move on to other companies,
or start new ones.
The downliners are moved into other schemes.
The scheme will only migrate, transform.
It's a hydra.
[interviewer 2] What is the vision for the company?
What's LuLaRoe 2.0?
There is still, right this minute,
as we sit here talking,
a huge opportunity
to sell clothing to women in America.
Hi, loves. How are you?
This is Jill Drehmer, your LuLaRoe fashion retailer.
I have a ton of Nickis and a ton...
[Jill D] I wanna keep working and doing LuLaRoe.
I get excited. I have new inventory coming this week.
New product, new styles.
And I'm gonna get on camera.
I'm gonna model them for my customers.
I'm gonna show them how they fit, how to style them.
And I'm gonna package and ship.
We are creating something that we didn't even know
that we did seven years ago,
that is creating that sense of courage
and confidence and security.
You get to take charge.
You get to be the boss.
You know, it's like, it's easy.
And if they could just understand you gotta work it
and you gotta decide, "Okay, this is what I'm going to do."
I'm going to put my head down
and I'm gonna put my heart and soul into it for 90 days..."
[overlapping chatter]
[Derryl] LuLaRoe is a cautionary tale
of a company that grew too fast for its own good.
History will ultimately remember LuLaRoe as an unethical, immoral family.
Because history is written by the victors.
In the words of General Martok from Star Trek: Deep Space Nine,
"And history will remember our side prevailing over them."
[upbeat music playing]