Holiday Magic

Infobox Company
company_name = Holiday Magic
company_
company_type = For-profit
genre =
foundation = Oct. 14, 1964 [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) ] ]
founder = William Penn Patrick
location_city =
location_country =
location = San Rafael, California,
USA
origins =
key_people = Roland R. Nocera, President, CEO
area_served =
industry = 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 – 1973) in the United States. Originally the organization distributed goods such as 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. [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 ] ] The organization was dissolved in 1974, subesquent to the death of Patrick in 1973.

The company had been investigated by the Market Court of Sweden, 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.

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.

Legal Problems

The State of California filed suit against Holiday Magic, in December 1972 [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 = ] .

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.." [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 = ]

In June 1973, the United States Securities and Exchange Commission filed a lawsuit against Holiday Magic [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 = ] , charging Patrick with "bilking some 80,000 people out of more than $250 million through his Holiday Magic cosmetics and soap empire."

The company was investigated by the Federal Trade Commission"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.] [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 = ] , and in June 1973 the company was found guilty of deceptive trade practicescite 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 =
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.] . The 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.

In 1973, Holiday Magic's proceedings were prohibited by the Market Court of Sweden, and a fine of 2 million kronor was imposed.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.] .

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 sales ["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.] . 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" ["Federal Trade Commission Oversight", Hearings, 1974, Pp. 83., March 1, 7, 14; May 9, 1974, United States Congress., Senate. Committee on Commerce.] . 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" [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 = ] .

The company was cited by the United States House of Representatives in a 1975 hearing ["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.] as an example of consumer fraud, again in 1977"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.] , and in 1991, in a hearing by the House Committee on Small Business ["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.] . Katz's "Everybody's Business: An Almanac" also referred to Holiday Magic as a "pyramid sales organization" [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
"Shaklee tries hard to distinguish themselves from pyramid sales organizations, such as "Holiday Magic," that have run afoul of the law."] . Turner described it as one of the first "pyramid marketing" companies in America [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] . Clarke referred to the company as an "illegitimate" business [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] . 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).." [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
"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).."] Howe wrote in the "San Francisco Chronicle" that Holiday Magic was "..one of the largest of all pyramid schemes.."

Holiday Magic is used as an example in graduate level criminal justice coursework to analyze the nature of corporate scams [DeMuro, RG. "Holiday Magic Inc.: An Anatomy of a Scam", Rutgers University, NJN Brunswick - 1982 - Rutgers University. Graduate School of Criminal Justice] . According to the "Duke Law Journal": "Illegality permeated every facet of the promotion of the Holiday Magic marketing program." [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 = ] One of the "Holiday Magic Inc." cases was also cited by "The University of Chicago Law Review" [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 = ] and the "Columbia Law Review" [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 = ] . 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 schemes [ [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] . Faltinsky described Holiday Magic as "..the largest pyramid scam of all time.." [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 ]

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. Holiday Magic distributors were invited, though not required, to attend the 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. . . Navarro described the training as having "overtones of strict military training techniques.

Ben Gay, a high-level instructor at Leadership Dynamics, was President of Holiday Magic in the United States. 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 "" [Church, Gene., "The Pit", Pp. 2, 8.
"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.)"] .

Mind Dynamics

William Penn Patrick bought Mind Dynamics in 1970cite book
last = Church
first = Gene
authorlink =
coauthors = Conrad D. Carnes
title =
publisher = Outerbridge and Lazard
date = 1972
location = New York
pages =
url =
doi =
id = ] 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
Page. 54. :
"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."] . The Mind Dynamics course was cited as providing "a means of achieving personal success through the conscious use of the subconscious mind". Distributors for Holiday Magic, who took the course, have considered it as a Holiday Magic Business expense. ".

ales Dynamics

Sales Dynamics was another program of instruction for pay available to Holiday Magic Distributors to help them in their business activities.

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..

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).

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).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 =
"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."] .

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, LebanonIn 2006 he published a book (To Beirut and Back - An American in the Middle East) dealing, in part, with his experiences.

See also

References

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.