Holiday Magic 1546058 221058588 2008-06-22T21:45:11Z DOI bot 6652755 Citation maintenance. You can [[WP:DOI|use this bot]] yourself! Please [[User:DOI_bot/bugs|report any bugs]]. {{Infobox Company | company_name = Holiday Magic | company_logo = | company_type = [[For-profit]] | genre = | foundation = Oct. 14, 1964<ref name="hldymagic">[http://www.mlmlaw.com/library/cases/mlm/ftc/hldymagc.htm MLM Law - Lawyer Grimes & Reese PLLC - Attorney Specializing in Multilevel Marketing - HOLIDAY MAGIC, INC., ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT AND SEC. 2(a) OF THE CLAYTON ACT Docket 8834 (1974)<!-- Bot generated title -->]</ref> | founder = [[William Penn Patrick]] | location_city = | location_country = | location = [[San Rafael, California]],<br>{{USA}} | origins = | key_people = [[Roland R. Nocera]], President, [[CEO]] | area_served = | industry = [[Consumer|Consumer products]] | products = [[Cosmetics]] | services = | revenue = | operating_income = | net_income = | num_employees = | parent = | divisions = | subsid = | owner = [[William Penn Patrick]] | company_slogan = | homepage = | dissolved = 1974 | footnotes = }} '''Holiday Magic''' was a [[multi-level marketing]] organization, founded in 1964, by [[William Penn Patrick]] (1930&nbsp;&ndash; 1973) in the [[United States]]. Originally the organization distributed goods such as [[Home care|home-care products]] and [[cosmetics]]. Company distributors were encouraged to recruit other distributors in a [[multilevel marketing]] structure, which was later characterized as a [[pyramid scheme]]. On [[May 16]] [[1974]], a compromise settlement with approximately 31,000 class members, establishing a trust fund worth $2,600,381.00, was approved by the court.<ref name=marshall>[http://www.mlmlaw.com/library/cases/mlm/federal/9marshall.htm MLM Law - Lawyer Grimes & Reese PLLC - Attorney Specializing in Multilevel Marketing - Marshall v. Holiday Magic, Inc. (1977) 550 F.2d 1173<!-- Bot generated title -->]</ref> The organization was dissolved in 1974, subesquent to the death of [[William Penn Patrick|Patrick]] in 1973. The company had been investigated by the Market Court of [[Sweden]]<ref name="micklitz" />, [[United States Securities and Exchange Commission]], the [[Federal Trade Commission]], and the [[State of California]]. Holiday Magic is cited as an example in graduate level coursework on [[criminal justice]] and law journals. == Organization == === Origins === In 1964, after a bankruptcy and several business failures, Patrick (age 33) was walking by a garage in [[San Rafael, California]], and noted that fruit-scented cosmetics were being sold. The company called Zolene was about to go out of business. Patrick bought all of the cosmetics supplies for $16,250, and founded Holiday Magic, Inc. After the purchase, Patrick began selling distributorships in his new company<ref name="roleofsmall" />. Patrick, a student of [[Alexander Everett]] (founder of Mind Dynamics), used Mind Dynamics techniques as well as the [[Silva Mind Control Method]] in the Holiday Magic organization<ref name="thepit" />. == Legal Problems == The [[State of California]] filed suit against Holiday Magic, in December 1972<ref>{{cite news | last = Staff | first = | coauthors = | title = Holiday Magic was the sixth company brought to court.. | work = Star-News, [[Pasadena, California]] | pages = | language = | publisher = | date = [[December 7]], [[1972]] | url = | accessdate = }} </ref>. In February 1973, Holiday Magic was sued by [[Avon Products]]. In the lawsuit, Avon Products' claimed that "Holiday Magic employees distributed leaflets accusing Avon of goon squads, paying off The District attorney's office.."<ref>{{cite news | last = Staff | first = | coauthors = | title = Avon's Suit Cites Accusations | work = The Fresno Bee | pages = | language = | publisher = | date = [[February 23]], [[1973]] | url = | accessdate = }} </ref> In June 1973, the [[United States Securities and Exchange Commission]] filed a lawsuit against Holiday Magic<ref>{{cite news | last = Staff | first = | coauthors = | title = SEC Files Suit against 13 firms | work = The Fresno Bee | pages = | language = | publisher = | date = [[June 30]], [[1973]] | url = | accessdate = }} </ref>, charging [[William Penn Patrick|Patrick]] with "bilking some 80,000 people out of more than $250 million through his Holiday Magic cosmetics and soap empire."<ref name="time73" /> The company was investigated by the [[Federal Trade Commission]]<ref name="roleofsmall">"The Role of Small Business in Franchising, Hearings Before the Subcommittee on Minority Small Business.", United States Congress. United States House of Representatives. House Permanent Select Committee on Small Business., 1973, P. 127, 137, 157, 203.</ref><ref>{{cite news | last = Staff | first = | coauthors = | title = Mondaie Says Pyramid Selling Top Consumer Fraud Problem | work = The Coshocton Tribune | pages = | language = | publisher = | date = [[September 22]], [[1974]] | url = | accessdate = }}</ref>, and in June 1973 the company was found guilty of deceptive trade practices<ref name="time73">{{cite news | last = Staff | first = | coauthors = | title = Battling the Biggest Fraud | work = [[Time Magazine]] | pages = 2 pgs. | language = | publisher = | date = [[July 16]], [[1973]] | url = http://www.time.com/time/magazine/article/0,9171,907582,00.html | accessdate = }}<br>William Penn Patrick, a former mentor of Turner's, was charged last month by the Securities and Exchange Commission with bilking some 80,000 people out of more than $250 million through his Holiday Magic cosmetics and soap empire. </ref>. The [[Federal Trade Commission|FTC]] found that Holiday Magic was in violation of section 5 of the [[Federal Trade Commission Act]], and section 2 (a) of the [[Clayton Antitrust Act]]<ref name="micklitz" />. In 1973, Holiday Magic's proceedings were prohibited by the Market Court of [[Sweden]], and a fine of 2 million [[kronor]] was imposed.<ref name="micklitz">Micklitz, Monazzahian, and Robler; [http://ec.europa.eu/dgs/health_consumer/library/surveys/sur10_02.pdf Door to Door Selling, Pyramid Selling, Multilevel Marketing], CONTRACT NO. A0/7050/98/000156, A STUDY COMMISSIONED BY THE EUROPEAN COMMISSION, VOLUME II: ANALYSIS. November 1999.; Pages 196, 205, 209, 214, 215, 233.</ref>. === Pyramid scheme === The company was termed as part of the "big three" scams, in a 1974 [[United States Senate]] hearing before the Consumers of the Committee on Commerce that dealt with [[pyramid schemes|pyramid sales]]<ref>"Pyramid Sales: Hearing Before the Subcommittee for Consumers of the Committee on Commerce, United States Congress", 1974, United States Congress, Pp. 6, 19, 24., Library of Congress.</ref>. 1974 hearings before the Congressional Oversight panel of the Federal Trade Commission described Holiday Magic as a "Multi-level marketer of cosmetics", that used an "unfair and deceptive pyramid distribution scheme"<ref>''Federal Trade Commission Oversight'', Hearings, 1974, Pp. 83., March 1, 7, 14; May 9, 1974, United States Congress., Senate. Committee on Commerce.</ref>. Holiday Magic was also labeled a "pyramid scheme" and a "multi-level distributorship" by the United States Bureau of Domestic Commerce, in their 1976 published book: ''Crimes Against Business: A Management Perspective''<ref>{{cite book | last = United States Bureau of Domestic Commerce | first = | authorlink = | coauthors = | title = Crimes Against Business: A Management Perspective | publisher = U.S. Dept. of Commerce | date = 1976 | location = | pages = 103, 106, 114 | url = | doi = | id = }} </ref>. The company was cited by the [[United States House of Representatives]] in a 1975 hearing<ref>"Equal Credit Opportunity Act Amendments and Consumer Leasing Act-1975., Hearings, United States Congress. Senate. Committee on Banking, Housing and Urban Affairs. Subcommittee on Consumer Affairs. 1975, P. 304., Hearings on S. 483, 1900, 1927, and 1961, and H.R. 5616.</ref> as an example of [[consumer fraud]], again in 1977<ref name="77consumerfraud">"Summary of Testimony and Findings and Conclusions Resulting from Hearings in New York on Drug Law.", United States Congress, Select Committee on Narcotics Abuse and Control, 1977, P.53.</ref>, and in 1991, in a hearing by the House Committee on Small Business<ref>"Franchising in Hard Times: Hearing Before the Committee on Small Business, House of Representatives.", United States Congress. House Committee on Small Business, 1991, ISBN 0160368979 , P. 14, 90.</ref>. Katz's ''Everybody's Business: An Almanac'' also referred to Holiday Magic as a "pyramid sales organization"<ref>{{cite book | last = Katz | first = Michael | authorlink = | coauthors = Milton Moskowitz, Robert Levering | title = Everybody's Business: An Almanac: An Irreverent Guide to Corporate America | publisher = Harper & Row | date = 1980 | location = | pages = Pp. 243. | url = | doi = | id = ISBN 0062506218 }}<br>"Shaklee tries hard to distinguish themselves from pyramid sales organizations, such as "Holiday Magic," that have run afoul of the law."</ref>. Turner described it as one of the first "pyramid marketing" companies in America<ref>{{cite book | last = Turner | first = Glenn W. | authorlink = | coauthors = | title = All Things Are Possible | publisher = Xulon Press | date = 2007 | location = | pages = Pp. 161-164. | url = | doi = | id = ISBN 160034898X}} </ref>. Clarke referred to the company as an "illegitimate" business<ref>{{cite book | last = Clarke | first = Margaret D. | authorlink = | coauthors = | title = The Triumph of Louise Laurel & Successful Parenting/Nurturing: By the Hand of God | publisher = Xulon Press | date = 2002 | location = | pages = Pp. 59. | url = | doi = | id = ISBN 1591602777}} </ref>. Tobias poked fun at the pyramid nature of the organization, in his book ''The Only Investment Guide You'll Ever Need'', telling readers to be wary of "..Holiday Magic - where the big money to be made was not in selling cosmetics, but in selling franchises to sell franchises (to sell franchises).."<ref>{{cite book | last = Tobias | first = Andrew | authorlink = | coauthors = | title = The Only Investment Guide You'll Ever Need | publisher = Bantam Books | date = 1989 | location = | pages = Pp. 12. | url = | doi = | id = ISBN 0553262513 }}<br>"Things that look like the cosmetics companies but are really chain letters in disguise, like Glenn Turner's Koscot International and Holiday Magic - where the big money to be made was not in selling cosmetics, but in selling franchises to sell franchises (to sell franchises).."</ref> Howe wrote in the ''[[San Francisco Chronicle]]'' that Holiday Magic was "..one of the largest of all pyramid schemes.."<ref name="howe" /> Holiday Magic is used as an example in graduate level [[criminal justice]] coursework to analyze the nature of corporate scams<ref>DeMuro, RG. "Holiday Magic Inc.: An Anatomy of a Scam", [[Rutgers University]], NJN Brunswick - 1982 - Rutgers University. Graduate School of Criminal Justice</ref>. According to the ''Duke Law Journal'': "Illegality permeated every facet of the promotion of the Holiday Magic marketing program."<ref>{{cite journal | last = Hildebrandt | first = Stephen A. | authorlink = | coauthors = | title = Heater v. FTC and the Federal Trade Commission Improvement Act: The FTC's Power to Order Restitution | journal = Duke Law Journal | volume = 1975 | issue = 2 | pages = pp. 379–388 | publisher = | date = May 1975 | url = | doi = 10.2307/1371995 | id = | accessdate = }} </ref> One of the ''Holiday Magic Inc.'' cases was also cited by ''The University of Chicago Law Review''<ref>{{cite journal | last = Merrill | first = Thomas W. | authorlink = | coauthors = | title = First Amendment Protection for Commercial Advertising: The New Constitutional Doctrine | journal = The University of Chicago Law Review | volume = 44 | issue = 1 | pages = 205–254 | publisher = | date = Autumn, 1976 | url = | doi = 10.2307/1599265 | id = | accessdate = }} </ref> and the ''Columbia Law Review''<ref>{{cite journal | last = Magaziner | first = Fred T. | authorlink = | coauthors = | title = Corporate Defamation and Product Disparagement: Narrowing the Analogy to Personal Defamation | journal = Columbia Law Review | volume = 75 | issue = 5 | pages = 963–1008 | publisher = | date = June 1975 | url = | doi = 10.2307/1121559 | id = | accessdate = }} </ref>. The Office of the [[State Attorney General]] in [[Maine]], [[United States]] cites ''In re Holiday Magic, Inc., 84 F.T.C. 748'' as an example of [[pyramid scheme]]s<ref>[http://www.maine.gov/ag/index.php?r=clg&s=chap22 Pyramid Schemes Are Illegal], ''Consumer Law Guide'', Chapter 22: Consumer Rights And Multilevel Marketing (Pyramid) Schemes, Office of the [[State Attorney General]], [[Maine]], [[United States]]</ref>. Faltinsky described Holiday Magic as "..the largest pyramid scam of all time.."<ref>{{cite journal | last = Faltinsky | first = Raymond J. | authorlink = | coauthors = | title = The Chaos of Multilevel Marketing and Pyramid Sales Laws: A Federal Remedy | journal = Supervised Analytical Writing: [[Yale Law School]] | volume = | issue = | pages = Pages 13, 14, 23, 35 | publisher = | date = Spring 1992 | url = http://freelife.com/info/thesis/body.pdf | doi = | id = | accessdate = | format = {{Dead link|date=May 2008}} }} </ref> == Related Companies == === Leadership Dynamics === In 1967 , William Penn Patrick wrote a booklet, entitled ''Happiness and Success through Principle'', and founded [[Leadership Dynamics]] based on those principles.<ref name="navarro" /> Holiday Magic distributors were invited, though not required, to attend the [[Leadership Dynamics|Leadership Dynamics Institute]] self-improvement sessions at a cost of $1000 each. Those in the positions of Instructor General, Trainer General, and Senior General were required to take the training. .<ref name=hldymagic /> <ref name="thepit" />. Navarro described the training as having "overtones of strict military training techniques<ref name="navarro" />. Ben Gay, a high-level instructor at Leadership Dynamics, was President of Holiday Magic in the United States<ref name="thepit" />. Though he claimed Leadership Dynamics was a separate company, "..in no way related to Holiday Magic, Inc.", Gene Church pointed out many inconsistencies in this statement, in his book ''[[The Pit: A Group Encounter Defiled]]''<ref name="thepit" /><ref>Church, Gene., ''The Pit'', Pp. 2, 8.<br>"Ben Gay stated that leadership Dynamics Institute was a separate company, in no way related to Holiday Magic, Inc. (It must have been a coincidence that Ben Gay was at that time President of Holiday Magic in the United States. A coincidence that the founder of Holiday Magic, William Penn Patrick was co-owner of LDI. Coincidence that instructor Jerry Booz was National Vice-President for Holiday Magic Ltd. in Canada, that instrutctor Sharoll Shumate was Regional Vice-President for Holiday Magic in the United States Northeast, and that instructor Vance Powell was Regional Vice-President for Holiday Magic in the United States Southwest.)"</ref>. === Mind Dynamics === William Penn Patrick bought [[Mind Dynamics]] in 1970<ref name="thepit">{{cite book | last = Church | first = Gene | authorlink = | coauthors = Conrad D. Carnes | title = [[The Pit: A Group Encounter Defiled]] | publisher = Outerbridge and Lazard | date = 1972 | location = New York | pages = | url = | doi = | id = }} </ref> <ref name="navarro">{{cite book | last = Navarro, | first = Espy M. | authorlink = | coauthors = Robert Navarro | title = Self Realization: The Est and Forum Phenomena in American Society | publisher = Xlibris Corporation | date = 2002 | location = | pages = 54, 55, 61, 62 | url = | doi = | id = ISBN 1401042201}}<br>'''Page. 54. :'''<br>"Mind Dynamics, founded by Alexander Everett, was the major forerunner of large group awareness trainings. Although Mind Dynamics was only in existence for a few years, it sparked an entire industry of similar trainings."</ref>. The Mind Dynamics course was cited as providing "a means of achieving personal success through the conscious use of the subconscious mind".<ref name=hldymagic /> Distributors for Holiday Magic, who took the course, have considered it as a Holiday Magic Business expense. ".<ref name=hldymagic /> ===Sales Dynamics=== Sales Dynamics was another program of instruction for pay available to Holiday Magic Distributors to help them in their business activities.<ref name=hldymagic /> === Ceased operations === In 1974, after almost 10 years in operation and tied to pyramid schemes and controversy, both Leadership Dynamics and Mind Dynamics ceased operations.<ref name="navarro" />. ==Other Information regarding Company Executives and employees== [[CEO]] and President [[Roland R. Nocera]] pleaded guilty to [[securities fraud]], in the case ''United States v. Nocera, et al.'' (unrelated to Holiday Magic).<ref name="77consumerfraud" /> [[Larry Stephen Huff]], another key individual in the company, served two years in a Federal Prison, for charges related to a [[Ponzi scam]] (unrelated to Holiday Magic).<ref name="howe">{{cite news | last = Howe | first = Kenneth | coauthors = | title = L.A. Con Artist Behind Alleged Electricity Scam: Pyramid scheme linked to coming deregulation | work = [[San Francisco Chronicle]] | pages = A 1 | language = | publisher = | date = March 10, 1998 | url = http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/1998/03/10/MN44556.DTL | accessdate = }}<br>"As far back as 1973, Huff helped start one of the largest of all pyramid schemes, a cosmetics marketing business called Holiday Magic, which defrauded investors of $250 million, according to the Securities and Exchange Commission."</ref>. [[Abe F. March]] held several executive positions for Holiday Magic and her parent company U.S. Universal: * Regional Vice President, Canada (1971-1972) * Vice President, Greece (1972-1973) * Managing Director for Sta-Power, Germany (1973) He subsequently bought exclusive rights for Middle East distribution of Holiday Magic cosmetics and formed his own company, "Beauty Magic", in Beirut, Lebanon In 2006 he published a book (To Beirut and Back - An American in the Middle East) dealing, in part, with his experiences. == See also == {{wikisource}} ==References== {{Reflist|2}} === Further reading === ;Studies *[http://ec.europa.eu/dgs/health_consumer/library/surveys/sur10_02.pdf Door to Door Selling, Pyramid Selling, Multilevel Marketing], Study Commissioned by European Commission, November 1999. ;Legal cases *[http://www.mlmlaw.com/library/cases/mlm/ftc/hldymagc.htm 84 F.T.C. 748 - IN THE MATTER OF HOLIDAY MAGIC, INC., ET AL.], ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT AND SEC. 2(a) OF THE CLAYTON ACT , Docket 8834. Complaint, Jan. 18, 1971, Decision, Oct. 15, 1974 *[http://www.directsaleslaw.com/library/cases/mlm/feddistrict/wiholmagic.htm Holiday Magic Inc. et al. v. Robert W. Warren et al. (Free Speech issue - dismissed)], Civ. A. No. 71-C-659. United States District Court, E. D. Wisconsin. April 3, 1973. *Holiday Magic, Inc. v. Warren., 497 F.2d 687., C.A.Wis. 1974., May 20, 1974 *[http://www.mlmlaw.com/library/cases/mlm/federal/9marshall.htm Marshall v. Holiday Magic, Inc.], 550 F.2d 1173, 1176 (C.A.9 1977). *In re HOLIDAY MAGIC SECURITIES AND ANTITRUST LITIGATION., James J. Ward, et al. v. Holiday Magic, Inc., et al., N.D. California, Civil Action No. C-74-1067-LHB., No. 124., July 6, 1977. [[Category:Multi-level marketing]] [[Category:Pyramid and Ponzi schemes]] [[Category:Fraud]] [[Category:Large Group Awareness Training]]