### Amway: The Untold Story

Setzer v. Amway

Rick Setzer and Sue Lynn Setzer v. Amway Corporation, Richard M. Devos and Jay VanAndel, U.S. District Court, District of South Carolina, Greenville Division, 7/17/86

> "And in life you either get better or bitter. And losers choose to sue. It's not scriptural, but losers choose to sue."
> --Amway Tools King Dexter Yager, speaking at his men-only "Yager Network Marketing Institute" seminar, 1994. A featured speaker at this same seminar was Triple Diamond Rick Setzer, who had sued Amway and its two founders eight years earlier, charging them (among other things) with interfering with his tools business. At the Yager seminar, Setzer emphasized the importance of promoting functions to your downline: "Distributors who don't attend functions are still prospects. Alright? Distributors who don't attend functions are still prospects."

In the early 1980's, Amway Corporation conducted a study of the "tools" business and determined it to be inherently illegal and abusive. An internal report stated that the tools business was a "threat to the future security of Amway Corporation, at least in the United States," and described programs designed to "Eliminate the illegalities and abuses inherent in distributor (motivational) "systems" of non-Amway designed/produced audio visuals, literature, rallies and seminars."

We now know—as Amway has undoubtedly known all along—that some, perhaps most, high level distributors make far more money selling "motivational" tools then they do selling Amway products. (See the Hart, Morrison and Hayden lawsuits, and Probandt and Roberts web sites.) It should come as no surprise, then, that Amway's early attempts to deal with the threat posed by the illegal and unethical tools business—abortive and ineffectual though these attempts may have been—were met with resistance and hostility by the Diamonds who were raking in piles of tools cash. Rich DeVos makes reference to this in the "Directly Speaking" tapes that were part of Amway's response to the tools abuses.

This lawsuit, filed by Triple Diamond Rick Setzer, accuses Amway of intentionally interfering (by means of, among other things, distribution of the aforementioned "Directly Speaking" tapes) with Setzer's ability to profit from his tools business. His charges against Amway include:

- Non-payment of bonus moneys
- Intentional interference with contractual relations
- Intentional infliction of emotional distress
- Racketeering
- Breach of Contract
- Fraud

In describing the various frauds perpetrated by Amway, Setzer includes the following specific allegations:

> "The scheme and artifice to defraud, among other things, was devised to fraudulently lure millions of persons, including Plaintiffs, throughout the United States to leave their previous employment, invest money, purchase products and services and incur expenses under false pretenses from Amway Corporation and spend an enormous amount of time recruiting, training and motivating other distributors and reselling the Amway Products. The scheme, among other things, was devised to intentionally and fraudulently mislead persons, including Plaintiffs who were willing to sign contracts as distributors to believe:

1. Distributors would own their businesses, would not be subject to control of the company and would have a vested interest in their own distributorship in a percentage of Amway Sales from their downline distributors, when in fact and in truth, the purpose was to avoid employee payroll taxes, benefits and expenses and still maintain control of the distributors means, methods and tools of doing business.

2. Said business being owned and vested in each distributor as fully transferable during one's lifetime or at death, when in truth and in fact, Defendants would own and control the distributors' sales force and decide to whom said business may be transferred.

3. That the distributors would have a voice in the company by free election of a Board of Directors and that the policies of the company could only be changed with the consent of the Board, when in truth and in fact the Defendants had no such intention.

4. That as a part of the scheme to defraud, Defendants and the Enterprise intended to maintain control of the Board by coercion, intimidation and disregard of the existing policies as they and company officials so pleased.

5. To falsely represent to millions of people, including Plaintiffs that large and lucrative incomes could and were being earned by Amway Distributors through the resale of Amway Products and the recruitment of distributors, when in fact and in truth knew that only a minute percentage of less than 1% if that much, could enjoy such incomes by such activities.

6. That as Amway Distributors, you controlled your sales organization and could build a business of selling privately produced materials and training your downline sales organization when such fact is not true.

7. That said distributors business could not be terminated or interfered with except for just cause and only after following certain formal procedures of private due process as specifically set forth in Amway's manuals, when in truth and in fact, Amway had no intention of faithfully following the rules which it had established, but instead intended to arbitrarily change the established procedures, as it deemed beneficial to Defendants and Amway."

Setzer also accused Amway of defrauding distributors by intentionally misrepresenting in the Amagrams the income and lifestyles of high level distributors:

> "Defendants and Amway well knew that said representations were false and fraudulent and that Plaintiffs' would rely on said representations and continue to devote time energy and money by purchasing materials from products and recruiting distributors. The publications listed in paragraph 51 above represented the plan, and policies of Amway together with pictorial information depicting Distributors' aircraft, boats, pretentious homes, motor coaches, jewelry, dream vacations, businesses, lifestyles, lifetime security for family and in turn discredited other vocations as jobs which rob people of their freedom, when in fact Defendants and Amway knew that such depicted wealth was not likely to be attained by more than 1/2 of 1% of the distributors and that the source of wealth depicted was not attained through the sale of Amway Products, as represented in said Amagram."

Amway, in turn, filed a counter suit, accusing Setzer of (among other things):

- Non-payment of a loan
- Fraudulent Misrepresentation
- Negligent Misrepresentation
- Breach of Contract

According to Amway's counter suit, Setzer:

> "...produced, distributed and sold, and are producing, distributing and selling, literature, tape cassettes, tape recordings and other materials which violate the Code of Ethics and Rules of Conduct, including those set forth in Paragraphs 3 and 4 above. An example of such violative material is the document attached hereto and made a part hereof as Exhibit B. This document is not Amway-produced or Amway-approved, does not disclose average profits and earnings, includes representations as to potential earnings and benefits and leaves the impression that it is authorized by Amway, all in violation of Amway's Code of Ethics and Rules of Conduct. The document attached hereto as Exhibit B contains representations and statements that violate applicable federal and state law nd regulation. The Plaintiffs' violations of the Code of Ethics and Rules of Conduct have caused Amway to sustain substantial losses and damages in the sum of at least One Million Dollars ($1,000,000.00) and subject Amway to the possibility of investigation and/or enforcement actions being brought against it by state and federal agencies.

You would think that two parties that have such a low regard for each other's ethics and conduct would agree to part company. Or that Amway would terminate the distributorship of someone who had violated not only Amway's code of ethics (no laughing, please), but also state and federal law, and in doing so had cost Amway more than $1 million in damages. On the contrary. Setzer, of course, is still a Diamond distributor. Not only did Amway not give him the boot, but he's been a member of the ADA board the ADA board Executive Committee. (One has to wonder if Setzer informs his downline distributors of Amway's various fraudulent practices.) It would seem that Setzer and Amway, in order to get back to the business of using each other to make money, managed to overlook each other's (according to them) propensities for illegal and unethical behavior.

But that's not all. This case went to trial, and in April of 1988 Rich DeVos was questioned and cross-examined on the witness stand. The part of DeVos's testimony that I have is largely a recounting of Amway Corp.'s realization of the problems posed by the tools business, and its attempts to deal with those problems. DeVos stated under oath that:

1. Amway was not only unsuccessful in curbing the abuses inherent in the tools business, but its attempts to do so cost Amway $300 million in lost revenues. (Amway's reported annual sales fell from $1,500,000,000 in 1982 to $1,130,000,000 in 1983. This represented a drop of $370 million, the largest percentage decrease to date in Amway's annual earnings compared to the previous year. This would certainly be a strong incentive for Amway to cease any such attempts.)

Q. What happened in the area of the tools abuses, the private tools abuses addressed at that meeting?
A. Well, those abuses continued to this day, There are a variety of people who complain to me continually about some of those abuses, so that's an ongoing challenge that the organization faces.

Q. And let me ask you this, in your tape there you said that you would expect that the position that the company is taking, expressed in these various speeches, including the one we just heard, would be costly to the company; what did you mean by that?
A. Well, I said to some of our staff there that I thought that it would cost us a few hundred million dollars in volume—I think I said $300 million—as we went through a correction phase.
Q. And did it cost $300 million in volume?
A. I think we lost upward of $300 million in volume as we tried to go through this adjustment period.

Q. It is a position that you took in the early part of 1983. Have you deviated from that position in the Amway Corporation since then, with respect to your Ten Points and the subject matter contained therein?
A. Well, let's just say that we dealt with it the way we did. We did put some people under notice that they were doing things wrong. We pursued of course re-education but we never pursued it to its ultimate goal of really nailing anything down. [emphasis mine] In the meantime, the volume came down and we started to work at trying to hold the business together but the problem persisted in any case.

2. The number of distributors who achieved the Triple Diamond level was less than 0.3 percent:

Q. Out of the hundreds of thousands or [sic] distributors that were in the company, were signed up in the company in 1985, how many Triple Diamonds have there been, percentage-wise?
A. I don't really know, a very small percentage.
Q. Less than one-half of 1/16 of 1%.
A. I don't know, I won't argue with you. It is a very small percentage; unfortunately, that's true.

3. Some Amway produced materials, including Amagrams and videos, are deceptive in that they falsely represent the Amway incomes of distributors:

[Following the viewing of an Amway produced "Freedom Network" tape featuring Dexter and Birdie Yager talking about their three homes, boat, antique car collection, etc.]
Q. Does Amway Corporation produce tapes and materials which could reasonably lead people to believe that a distributor makes more money from the sale of these products than he actually does?
A. Yes, I think we have done some of that.
Q. So when you talk about that type of distortion, all of you have done some of that haven't you?
A. I am sure that we have.
Q. And that's part of the problem?
A. (Affirmative nod).
Q. But you do understand or appreciate this is a problem, but it started from the top and has worked its way down?
A. No, I don't necessarily agree with that but that's all right.
Q. Looking at Exhibit 10A and 10B, are those the regularly published Amagrams of Amway Corporation?
A. Yes, they are.
Q. Mr. DeVos, back to these Amagrams, just take a look at a few of them in there and tell me whether or not the depict the lifestyles of Amway distributors?
A. They depict the lifestyles of Amway distributors.
Q. Mr. DeVos, including those lifestyles in those Amagrams of your company, is there anything in those Amagrams which would indicate that those lifestyles could not [emphasis mine] have come from the income of those distributors from the Amway business?
A. No, they do not nor do they make allowance for the fact that they may have had money before they got into Amway.
Q. All right.
A. But I agree with you that they have a tendency to portray it as though it all came from Amway in some of those cases.

(I'm in the process of scanning the entire transcript of DeVos's testimony, and will post it on this site when time permits.)

By the way, how much do you think a Triple Diamond makes? Everyone "knows" that Diamonds are all millionaires, or so we're constantly being told, so a Triple Diamond must have an income of several million a year, right? According to Setzer's 1985 1099, which was submitted as evidence in this lawsuit, his total payout from Amway for that year was $139,356.19. Not a bad income, certainly, but hardly what many distributors are led to believe they'll be making at that level. It's no wonder that DeVos admits that the distributor lifestyles depicted by both Amway and non-Amway materials are misleading.

The outcome of the case was as follows:

- Plaintiff's counts VI, VII, VII and IX were dismissed.
- Amway's counterclaims were all dismissed.
- The jury found that the Setzers were entitled to recover the bonus money that was withheld, plus money for various awards and trips, and "quantum meruit," but not for anything else.
- The Setzers were awarded a judgement of $160,938.72.

`IN THE UNITED STATES DISTRICT COURT`
`FOR THE DISTRICT OF SOUTH CAROLINA`
`GREENVILLE DIVISION`

`RICK SETZER AND )`
`SUE LYNN SETZER )`
`Route 5, Rock Road ) Case No. 6:86-1898-3`
`Greer, South Carolina 29651 )`
`)`
`AND )`
`)`
`SETZER INTERNATIONAL, INC. )`
`A South Carolina Corporation )`
`3089 Highway 14 )`
`Greer, South Carolina 29651 )`
`)`
`AND )`
`)`
`AMBASSADORS INTERNATIONAL, INC. )`
`A South Carolina Corporation )`
`3089 Highway 14 )`
`Greer, South Carolina 29651 )`
`)`
`PLAINTIFFS, )`
`) SECOND`
`-vs- ) AMENDED COMPLAINT`
`)`
`AMWAY CORPORATION, A MICHIGAN )`
`CORPORATION, RICHARD M. DEVOS )`
`AND JAY VANANDEL, ) JURY DEMANDED`
`7575 E. Fulton )`
`Ada, Michigan 49355 )`
`)`
`DEFENDANTS. )`

The Plaintiffs, Rick Setzer, Sue Lynn Setzer, Setzer International, Inc. (Setzer, Inc.,) and Ambassadors International, Inc.,
(Ambassadors) for their cause of action against the Defendants, Amway Corporation, ("Amway"), Richard M. DeVos ("DeVos"), Jay VanAndel ("VanAndel") allege and state as follows:

PARTIES

1. Rick Setzer and Sue Lynn Setzer are husband and wife, citizens of the United States and are residents of Greenville, South
Carolina.

2. Setzer International, Inc., (Setzer, Inc.) is a corporation, incorporated under the laws of the State of South Carolina and has its
principal place of business in Greenville County, South Carolina. Plaintiffs, Rick Setzer and Sue Lynn Setzer are the sole
shareholders of Setzer International, Inc. (Setzer, Inc.,). Setzer & Associates, Inc. and Setzer Enterprises, Inc. were South
Carolina Corporations whose assets, rights and liabilities were transferred to Rick and Sue Lynn Setzer, and the latter are
successors to said corporations. S.D.S., Inc., was a predecessor corporation to Setzer International, Inc. and Setzer International,
Inc. is a successor to all rights, assets and liabilities of S.D.S., Inc. CSI Corp. is a predecessor to Setzer International, Inc., and all
rights, assets and liabilities have been assigned to Setzer International, Inc.

3. Ambassadors International, Inc., is a South Carolina Corporation and has its principal place of business in Greenville County,
South Carolina. Rick Setzer and Sue Lynn Setzer are the sole shareholders of Ambassadors International, Inc.

4. Amway is a corporation, incorporated under the laws of the State of Michigan and has its principal place of business in Ada,
Kent County, Michigan,

5. Richard M. DeVos is President of Amway Corporation and a resident of the State of Michigan.

6. Jay VanAndel is the Chairman of the Board of Directors of Amway Corporation and a resident of the State of Michigan.

JURISDICTION AND VENUE

7. There is diversity of citizenship between Plaintiffs and all Defendants and the matter in controversy exceeds, exclusive of
interest and costs, the sum of Ten Thousand Dollars ($10,000.00). Jurisdiction is proper pursuant to Title 28 United States Code,
Section 1331, 1332, and Title 18 USC, Sec. 1964(c). Part of this action arises under the laws of the United States. Plaintiffs are
alleging a violation of their rights under Title IX of the Organized Crime Control Act of 1970, as amended 18 USC Sec. 1961, et
seq. Venue is proper pursuant to Title 28 U.S.C., Section 1391 and 18 USC, Sec. 1965(a) and 28 U.S.C., Sec. 139(b).

COUNT I

8. Defendant, Amway, is indebted to Plaintiffs, Rick Setzer and Sue Lynn Setzer upon an account in the sum of Forty Six
Thousand One Hundred Forty Three and 04/00 Dollars ($46,143.04) plus interest, which Defendant Amway has and continues to
refuse to pay, although the same is due and payable and Plaintiffs have made repeated demands upon Defendants, Amway, to
pay. A copy of said account is marked Exhibit "A" attached hereto and made a part hereof.

9. Rick Setzer and Sue Lynn Setzer are entitled to recover from Defendants Amway Corporation, the amount of Forty Six
Thousand One Hundred Forty Three and 04/100 Dollars ($46,143.04), plus interest as provided by law.

COUNT II

10. Amway is a direct sales business which utilizes a multi-level marketing and distributorship plan to recruit sales persons and to
sell its products and services, Amway produces a variety of household, personal, and motivational products, which it wholesales to Amway distributors. It also conducts rallies and meetings in the regular course of its business. Amway's plan is to train and
encourage distributors to sell its products and services and to recruit other persons to become distributors. Distributors are
rewarded by Amway for meeting these dual objectives by advancement in the Amway organization, bonuses on the sales volume
of the entire groups of sub-distributor sponsored by the distributor, a percentage of the retail sales price of the product or service
sold, sharing in the profits of the corporation, together with other miscellaneous rewards offered by Amway. All Amway
Distributors are required by Amway to sign an annual contract each year. All Defendants have conducted business with Plaintiffs
on a continuous basis in the State of South Carolina, Michigan and other states for more than 15 continuous years.

11. A distributor who continues to increase his business, in terms of number of distributors recruited and amount of products sold,
is awarded the position of "Direct Distributor". If the "Direct Distributor" continues to increase his business, he progresses to
higher levels, known more commonly as "pin levels", and receives higher commissions and bonuses, as well as fringe benefits, such as free trips, automobiles, etc. The higher levels, in ascending order, are: Ruby, Pearl, Emeralds Diamonds Double Diamond,
Triple Diamond, Crown and Crown Ambassador.

12. Each Amway Distributor under the terms of the Amway contract is an independent business person, who owns his, her or
their own business distributorship and are not employees of Amway. Plaintiffs became Amway Distributors in February 1971. At
all pertinent times herein, Plaintiffs had reached the Triple Diamond Level and under the terms of their agreement with Amway,
they were entitled to bonuses and benefits set forth in paragraphs 10 and 11 above.

13. Under the terms of the agreements dated February 1, 1971 and renewed each year thereafter to the present time, between
Amway and Plaintiffs, Rick Setzer and Sue Lynn Setzer, said Plaintiffs were entitled to be paid the bonuses in cash as the same
became due, but although said Plaintiffs have performed all the conditions precedent on their part to be performed, Amway
intentionally, maliciously and wrongfully refuses to pay said bonuses, thereby breaching its contract with said Plaintiffs. By virtue
of said breach, Plaintiffs have been damaged in the amount of $46,143.04, their profit sharing bonuses for the fiscal year beginning September 1, 1984 and ending August 31, 1985, the amount of which bonus is unknown to said Plaintiffs plus interest; their year
end bonuses for the fiscal year beginning September 1, 1985 and ending August 31, 1986, plus profit sharing for the same period,
which amount is presently known only by Defendants Amway.

COUNT III

14. Plaintiffs adopt and incorporate by reference, paragraphs 1 through 13 of Plaintiffs' Complaint.

15. During the months of July and November 1984, all Defendants, through their authorized agents and employees induced the
Plaintiffs, Rick Setzer and Sue Lynn Setzer, to purchase an Independent Amway Distributorship owned by Keith Belknap, Sr. and
Jimmie Lee Belknap; that at the time in question, the Defendants were for reasons of their own displeased and dissatisfied with
the Belknaps and requested and persuaded said Plaintiffs to enter into a contract with Belknaps to purchase their Amway Triple
Diamond Distributorship. Said Defendants in order to induce Setzer, to initiate, facilitate and attempt to consummate said
purchase, on or about January 17, 1985, advanced One Hundred Fifty Thousand Dollars ($150,000.00) cash to Setzer, for said
purpose. On or about February 1, 1985, Defendants further substantially assisted, initiated and aided Setzer, to obtain a loan from
The Michigan National Bank, Grand Rapids, Michigan in the amount of One Hundred Fifty Thousand Dollars ($150,000,00), which funds were used to reimburse Amway for the funds advanced to Plaintiffs to purchase the Belknap business.

16. At the time of inducing and persuading said Plaintiffs to purchase the said Belknap Distributorship, all Defendants did willfully,
maliciously and fraudently [sic] do so without any intention of transferring the Belknap Distributorship to said Plaintiffs, but merely
used Setzer, as a conduit to ultimately transfer the Belknap Distributorship to persons of their own choicer to wit: Donald Brannon, who the Defendants knew was not in a position to successfully negotiate a purchase from the Belknaps, but who the Defendants
had chosen, for reason known only to them, to own the Belknap business.

17. All Plaintiffs in reasonable reliance upon Amway's conduct proceeded to incur reasonable expenses and Rick Setzer and Sue
Lynn Setzer performed services to protect, maintain and build the Belknap Distributorship and paid Belknap One Hundred Fifty
Thousand Dollars ($150,000.00), as part of the purchase price of Two Hundred Seventy Thousand Dollars ($270,000.00). Under
the Amway rules, in order to finally consummate the purchase of an Amway Distributorship, said purchase must be approved by
the Amway Corporation, DeVos and VanAndel. The Defendants, after inducing, facilitating, assisting, financing and otherwise
abetting the Plaintiffs to purchase said businesss suddenly and without good cause have and continue to maliciously and
intentionally withhold formal approval of said sales well knowing that Plaintiffs, were incurring substantial expenses and Rick
Setzer and Sue Lynn Setzer were performing services in reliance upon Defendants' representations and actions. Plaintiffs, Setzer
International, Inc. has incurred reasonable and necessary expenses in the amount of Seventy Five Thousand Five Hundred Fifty
Five and 38/100 Dollars ($75,555.38) and Rick Setzer and Sue Lynn Setzer have performed services, the reasonable value of
which is Fifty One Thousand Dollars ($51,000.00) plus payment of One Hundred Fifty Thousand Dollars ($150,000.00), for a total
of Two Hundred Seventy Six Thousand Five Hundred Fifty Five and 38/100 Dollars ($276,555.38), plus interests all to the unjust
enrichment of Defendants Amway. Plaintiff, Rick Setzer has been in ill health for several months and Defendants were well
aware of his condition, but with malice and calculated actions have worked continuously to take advantage of his financial and
physical impairments, to attempt to drive him out of the business entirely.

18. Plaintiffs are entitled to recover $276,555.38, plus interest and costs.

COUNT IV
INTENTIONAL INTERFERENCE WITH CONTRACTUAL RELATIONS

19. Plaintiffs incorporate paragraphs 1 through 18 of Counts I through III as if fully rewritten herein.

20. In furtherance of the Defendants' inducements, encouragement and representations, the Plaintiffs formed a partnership with
Donald Brannons (hereinafter Brannon) another Amway Distributor.

21. The Plaintiffs and Brannon executed a written Partnership Agreement and formed a general partnership thereby. The
purpose of the general partnership was to purchase the Belknap Distributorship. The Defendants encouraged Plaintiffs to enter
into the Partnership Agreement with Brannon, as Brannon personally sponsored Keith and Jimmie Lee Belknap. With Brannon as
a partner of the partnership buying the Belknap Distributorship, no waivers from distributors sponsored by Belknap were required.
Said waivers are generally required by Amway Corp.

22. The Plaintiffs expended great sums of money, as a result of airplane trips, long distance calls and hotel and motel expense in
order to consummate the Partnership Agreement with Brannon.

23. At some point thereafter, the middle to latter part of 1985, the Defendants approved the sale and transfer of the Belknap
Distributorship to Brannon, individually. The Defendants did not communicate to Plaintiffs that the sale and transfer had occurred.

24. The Defendants attempted to sell and transfer the Belknap Distributorship to Brannon by way of novation. The Defendants
attempted to substitute Brannon, individually, for that of the Setzer-Brannon Partnership.

25. The Defendants in orchestrating the sale and transfer of the Belknap Distributorship to Brannon individually, did not obtain the
assent of Rick and Sue Lynn Setzer.

26. In approving the sale and transfer of the Belknap Distributorship to Brannon, Defendants did not impose like conditions on
Brannon as were imposed upon the Setzer-Brannon Partnership.

27. The Defendants, in refusing to approve the sale and transfer of the Belknap business to the Setzer-Brannon Partnership, and
subsequently approving and orchestrating said sale and transfer to Brannon individually, tortiously interfered with the contractual
relations between Plaintiffs and Brannon. The Defendants tortious interference with the contractual relations between Plaintiffs
and Brannon was intentional, malicious, improper and without privilege or justification.

28. As a result of the Defendants' willful and intentional conducts Plaintiffs have suffered damages in excess of $325,000.00.

29. By way of examples each of the Defendants should be penalized for their wrongful, willful and malicious conduct in an
amount to be determined by the jury.

COUNT V
(INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS)

30. Plaintiffs hereby adopt and incorporate by reference paragraphs 1 through 29 of Counts I through IV as if fully rewritten
herein.

31. While the Defendants were withholding approval of the sale and transfer of the Belknap Distributorship to Plaintiffs, the
Defendants also began in 1985, and have continued, to withhold monies due Plaintiffs. Said funds have been fully earned by
Plaintiffs and are being withheld for reasons only known to Defendants.

32. As a direct and proximate result of withholding the monies referred to in paragraph 29 above, the Defendants caused
Plaintiffs' various loans from the Michigan National Bank to be in default as of January 30, 1987.

33. When Plaintiffs loans were caused to be in default, Michigan National Bank and Defendants threatened Plaintiffs with
lawsuits and other economic sanctions.

34. Plaintiffs threats referred to in paragraph 33 above, were made with the knowledge that Plaintiff, Rick Setzer, was in bad
health and unable to adequately respond to said threats.

35. Defendants, in furtherance of their malicious and willful purpose, began in 1987, to preclude Plaintiffs from participating in
normal Amway activities, including trips and contests.

36. The Defendants also prevented Amway agents and employees from attending functions and rallies sponsored by Plaintiffs.
The custom and policy of Amway Corporation is to send Amway employees to distributor functions in order to lend credibility to
the distributor holding the function. As a direct and proximate result of precluding Amway agents and employees from attending
functions and rallies, Plaintiffs' reputation and credibility in the Amway world were damaged.

37. Defendants' malicious, wilfull and intentional acts took the form of: 1) precluding Plaintiffs from attending two EDC trips; 2)
precluding Plaintiffs from attending two "diamond club" trips which Plaintiffs were entitled to attend based upon achieving a
certain "pin level"; 3) precluding Plaintiffs from attending two yacht trips; 4) precluding Plaintiffs from the right to participate in
the "Custom Promotion Program"; 5) withholding bonuses due Plaintiffs for profit sharing, emerald bonuses and diamond
bonuses; 6) withholding monthly bonuses due Plaintiffs, including the 3% Direct Distributor Bonus, the 1/28 pearl bonus and the
diamond incentive bonus; 7) precluding Plaintiffs from participating in the "Q-12 incentive program"; 8) precluding Amway
agents and employees from attending any meeting at which the Plaintiffs were present beginning in June, 1987. The various trips,
bonuses and programs referred to in this paragraph were fully earned by Plaintiffs pursuant to Amway Corporation's rules,
regulations and custom.

38. As a direct and proximate result of Defendants' malicious conduct, the Plaintiffs have lost credibility with their "downline"
distributor organization.

39. As a direct and proximate of Defendant's intentional malicious and outrageous acts, the Plaintiffs have been caused to suffer
severe emotional distress and as a result, Plaintiffs have suffered damages in excess of $50,000,00 plus interest and costs.

COUNT (VI)
RICO 18 USC, Sec. 1961, Et. Seq

40. Plaintiffs incorporate herein by reference the allegations contained in paragraphs 1 through 39 of Plaintiffs' Second Amended
Complaint.

RICO DEFENDANTS

41. Defendant, Jay Van Andel is and was at all times mentioned herein a person within the meaning of Title 18, Sec. 1961(3),
United States Code. Said Defendant is Chairman of the Board of Directors of Amway Corporation and is one of its founders,
Said Defendant is a person who is employed by and is associated with Amway Corporation, an enterprise engaged in, or the
activities of which affect, interstate or foreign commerce and conducts or participates, directly or indirectly in the conduct of such
enterprise's affairs through a pattern of racketeering activity as defined in Title 18 Sec. 1961(1)(5) of
the United States Code, in violation of 18 U.S.C. Sec. 1962(c).

42. Defendant, Richard M. DeVos is and was at all times mentioned herein a person within the meaning of Title 18, Sec. 1961(3),
United States Code. Said Defendant is one of the founders of Amway Corporation and is and has been at all times mentioned
herein President of Amway Corporation. Said Defendant is a person who is employed by and is associated with Amway
Corporation, an enterprise engaged in, or the activities of which affect, interstate or foreign commerce and conducts or
participates, directly or indirectly in the conduct of such enterprise's affairs through a pattern of racketeering activity as
defined as in Title 18 Sec. 1961(1)(5) of the United States Code, in violation of 18 U.S.C. Sec. 1962(c).

RICO ENTERPRISE

43. Amway Corporation is an enterprise within the meaning of Title 18 U.S.C. Sec. 1961(4). Amway Corporation is and was at
all times mentioned herein an enterprise engaged in the activities of which affect interstate commerce, to wit: a corporation
incorporated under the laws of the State of Michigan with its home office and principal place of business at 7575 East Fulton
Road, Ada Michigan. Amway Corporation at all times mentioned herein was and is engaged in the manufacture, distribution and
sale of domestic, personal and commercial products to its hundreds of thousands of distributors throughout the United States. Said
Amway Corporation is also engaged in the recruitment of multi-leval direct selling distributors and the sale of motivational and
training audio, audio-visual cassette tapes, books, sales aids, meetings and rallies throughout the United States.

PATTERN OF RACKETEERING ACTIVITY

44. Defendants have violated Title 18 U.S.C. Sec. 1962(6) in that said Defendants conspired to violate the provisions of
subsections (b) and or (c) of Sec. 1962. Said Defendants have, through a pattern of racketeering activity, maintained directly or
indirectly an interest in or control of Amway Corporation and by virtue of their employment or association did conduct or
participate, directly or indirectly in the conduct of Amway Corporation's affairs through a pattern of racketeering activities
in violation of Section 1962(b) and (c).

45. Defendants and Amway Corporation have devised two or more schemes to defraud, as hereinafter more particularly
described, and in furtherance of said schemes, used the United States Mail and wire facilities in interstate commerce in violation of Title 18, Secs. 1341 and 1343 of the United States Code after the effective date of RICO (October 15, 1970) and the last of which occurred within 10 years after the commission of the prior act of racketeering activity as defined in 18 U.S.C. Sec. 1961(3). Said
schemes to defraud were separate and distinct violations of Secs. 1341 and 1343 and were facilitated and effectuated by a
multitude of mail fraud and wire violations. Defendants through this unlawful activity acquired income with which to maintain
control of said Amway Corporation and as officers and associates of the " Amway Enterprise", said Defendants did, at all times
mentioned herein, conduct, participate directly or indirectly in the conduct of such actions and affairs through a pattern of
racketeering activities.

16. Plaintiffs state that the independent schemes to defraud and the multitude of individual violations of Sections 1341 and 1343,
committed in furtherance of said schemes were continuous from the time of their inception to the date of this Complaint and bore
a direct, substantial and close relationship to each other and to the affairs of Amway Corporation.

CONSPIRACY

47. On and after October 16, 1970 Defendants and on a continuous daily basis thereafter, without cessation through March,
1988, did wilfully and knowingly conspire, confederate and agree together and with others to violate 18 U.S.C. Sections 1962(a)(b) and (C), by agreeing to the following:

1. Through a pattern of racketeering activity acquired or maintained, directly or indirectly, an interest in or control of Amway

> Corporation (The Enterprise) which is engaged in and the activities of which affect interstate or foreign commerce, as more specifically alleged herein.

> 2. By being persons employed by or associated with Amway Corporation which is engaged in, or the activities of which affect, interstate or foreign commerce, and did conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity.

> 3. By receiving income derived, directly or indirectly from a pattern of racketeering activity by Amway Corporation in which Defendants acted as principals within the meaning of Section 2, Title 18 United States Code, and did use or invest, directly or indirectly, part of such income in the acquisition of an interest in, or establishment or operation of Merchandise Productions, Inc., a corporation formed under the laws of Delaware and organized on November 2, 1982, with its principal office in Ada, Michigan, the Amway Grand Plaza Hotel, Grand Rapids, Michigan, Mutual Broadcasting Co. and Peter Island, a vacation resort. Said enterprises are engaged in, or the activities of which affect interstate or foreign commerce.

SCHEMES TO DEFRAUD

NUMBER I

48. Amway Corporation, which was organized by Defendants, is a privately held corporation, the stock of which is owned or
controlled by Defendants, DeVos and Van Andel and said Defendants are and at all time's herein were the chief executive
officers of said corporation,

49. Said Defendants derive income from the activity of Amway Corporation and part of the corporate income was used in the
operation of the corporate business of selling its distributors a variety of domestic and commercial products and services, the
recruiting of distributors, including Plaintiffs, Rick and Sue Lynn Setzer.

50. The scheme and artifice to defraud, among other things, was devised to fraudulently lure millions of persons, including
Plaintiffs, throughout the United States to leave their previous employment, invest money, purchase products and services and
incur expenses under false pretenses from Amway Corporation and spend an enormous amount of time recruiting, training and
motivating other distributors and reselling the Amway Products. The scheme, among other things, was devised to intentionally and
fraudulently mislead persons, including Plaintiffs who were willing to sign contracts as distributors to believe:

> 1. Distributors would own their businesses, would not be subject to control of the company and would have a vested interest in their own distributorship in a percentage of Amway Sales from their downline distributors, when in fact and in truth, the purpose was to avoid employee payroll taxes, benefits and expenses and still maintain control of the distributors means, methods and tools of doing business.

> 2. Said business being owned and vested in each distributor as fully transferable during one's lifetime or at death, when in truth and in fact, Defendants would own and control the distributors' sales force and decide to whom said business may be transferred.

> 3. That the distributors would have a voice in the company by free election of a Board of Directors and that the policies of the company could only be changed with the consent of the Board, when in truth and in fact the Defendants had no such intention.

> 4. That as a part of the scheme to defraud, Defendants and the Enterprise intended to maintain control of the Board by coercion, intimidation and disregard of the existing policies as they and company officials so pleased.

> 5. To falsely represent to millions of people, including Plaintiffs that large and lucrative incomes could and were being earned by Amway Distributors through the resale of Amway Products and the recruitment of distributors, when in fact and in truth knew that only a minute percentage of less than 1% if that much, could enjoy such incomes by such activities.

> 6. That as Amway Distributors, you controlled your sales organization and could build a business of selling privately produced materials and training your downline sales organization when such fact is not true.

> 7. That said distributors business could not be terminated or interfered with except for just cause and only after following certain formal procedures of private due process as specifically set forth in Amway's manuals, when in truth and in fact, Amway had no intention of faithfully following the rules which it had established, but instead intended to arbitrarily change the established procedures, as it deemed beneficial to Defendants and Amway.

51. In order to effectuate and in furtherance of this first scheme to defraud, Amway form [sic] the time of its inception through
March 1988 on a month to month or a continuous basis, published manuals, newsletters, magazines such as the "Amagram",
prepared letters, contracts and memoranda, conducted meetings, rallies and seminars, in which Defendants and Amway knew
were false and misleading and distributed the same by depositing the same in the United States Mails at Ada, Michigan and having the same delivered to Plaintiffs in North Carolina and South Carolina and to Millions of Persons throughout the United States in
violation of Title 18, Section 1341 of the United States.

52. Defendants and Amway well knew that said representations were false and fraudulent and that Plaintiffs' would rely on said
representations and continue to devote time energy and money by purchasing materials from products and recruiting distributors.
The publications listed in paragraph 51 above represented the plan, and policies of Amway together with pictorial information
depicting Distributors' aircraft, boats, pretentious homes, motor coaches, jewelry, dream vacations, businesses, lifestyles, lifetime
security for family and in turn discredited other vocations as jobs which rob people of their freedom, when in fact Defendants and
Amway knew that such depicted wealth was not likely to be attained by more than 1/2 of 1% of the distributors and that
the source of wealth depicted was not attained through the sale of Amway Products, as represented in said Amagram.

53. Said mailings, along with a multitude of others, which contained misrepresentations are listed below with dates:

Mailed by Defendants in Ada Michigan to Plaintiffs in South Carolina
Amway Career Manual, 1972 thru 1980
Amway Direct Distributor Manuals 1972 thru 1985
Amagrams, Mailed to Plaintiffs:
February & April 1974
October, 1975
July and August 1976
December, 1977
February and October 1978
February, March, June, July, October, November, 1979
Feb., April, August, October, November and Dec., 1980
January, February, March, May and June, 1981
April, June, July, August, and December, 1982
March, December, 1985
July and November, 1986
November, 1981

54. In furtherance of the scheme to defrauds Defendants utilized the telephone and wire service to obtain money under false
pretenses from Plaintiffs for products and other services sold by Amway to Plaintiffs and other distributors. On Monday and
Tuesday of each week Amway, according to its routine policy, Defendant Amway, drafted on the account of Plaintiffs' deposits
with banks in which Plaintiffs maintained deposits, some of which were transferred by use of wire from Plaintiffs' accounts to
Amway Corporation Ada, Michigan, as follows:

`NAME OF BANK DATE OF ELECTRONIC TRANSFER AMOUNT`
`Security Bank, Athens, Ohio July 21, 1978 $2,407.63`
`Same " 28, 1978 2,566.96`
`Same November 21, 1979 1,792.96`
`Same November 30, 1979 944.15`
`Same December 5, 1979 502.61`
`First City Bank, Greenville October 11, 1980 1,301.02`
`Same South Carolina October 21, 198? 2,731.89`
`Same November 23, 1982 992.25`
`Same January 11, 1983 1,877.17`
`Same January 18, 1983 2,183.73`
`Greenville National Bank April 9, 1985 2,510.84`
`Same South Carolina April 11, 1985 1,411.30`
`Same September 9, 1986 1,026.95`
`Same September 23, 1986 797.15`
`Same July 30, 1987 1,097.12`
`Same October 8, 1987 1,776.58`
`Same January 28, 1988 2,904.88`
`Same February 29, 1988 3,624.50`

SECOND SCHEME TO DEFRAUD

55. Defendants and Amway Corporation acquired massive wealth through the efforts of the Distributors, including Plaintiffs and
during the execution of Scheme I, the Defendants together with others through the Amway Corporation Enterprise, on or about
October, 1982 conspired with each other and did effectuate a second artifice and scheme to destroy Plaintiffs' and other Amway
Distributors' successful, individual and private business of producing training, motivational and tool business in order to divert the
same to the benefit and profit of Amway Corporation and the Defendants. In order to accomplish their unlawful purpose did
intentionally, fraudulently and maliciously and by use of its superior position, conspire with each other and agents of Amway
Corporation to set in motion a fraudulent plan to obtain Plaintiffs' private business by a) intimidating Plaintiffs' contractual
customers who were also Amway Distributors, b) Deliberately degrading Plaintiffs and making false statements about them to
their customers, c) fraudulently changing the policies of Amway, without the approval of the Amway Board of Directors and d) by using extortionary means to deter Plaintiffs from continuing their business in order for Defendants to obtain the benefits of said
business. In furtherance of this Scheme to Defraud, Defendants by use of the United States Mails and Wire service, disseminated
thousands of pieces of literature to Amway Distributors throughout the United States and to Plaintiffs and their Customers for the
purpose of effectuating said scheme, each act of mailing being in violation of Title 18, Sec. 1341, USC. Said mailings stated or
implied that Plaintiffs and others like them were violating the law; were cheating the people; that Amway and governmental
authorities would bring them to justice; that Amway was going to terminate their distributorships and other such threats, Such
mailings occurred in January, 1983, and continued on a regular daily basis through 1988. Some of the mailings and the dates
thereof which contained the materials described above are listed as follows: Directly speaking tapes, March 1983, Diamond Club
Tapes, March 1983, Guideline dated September 1986, News Bulletin, October 11, 1982 and News Bulletin, Amagrams and other
printed materials, 1983 - 1986.

THIRD SCHEME TO DEFRAUD

56. On or about the 17th day of January, 1985, Defendants and Amway Corporation persuaded Plaintiffs to purchase the Amway
Distributorship of Keith and Jimmie Belknap of Tulsa, Oklahoma.

57. After Plaintiffs entered into a written agreement to purchase said distributorships and sometime between January, 1985 and
July 10, 1985, Defendants, Amway Corporation and other officers of Amway conspired to devise a scheme and artifice to defraud Plaintiffs and the Belknaps of their Distributorship.

58. In furtherance of this Third Scheme to Defraud, Defendants, Amway and Otto Stolz, Vice President and agent of Amway
placed a contract dated July 10, 1985, signed by Amway Corporation, Otto Stolz, Vice President, Transferor, in the United States
Mail transferring the Belknap Distributorship to one Donald Brannon of Tulsa, Oklahoma, thereby depriving Plaintiffs of the
purchase of said business. Thereafter, Defendants, Amway and its other officers and agents intentionally and wrongfully
completed said transfer on the records of Amway and fraudulently mailed checks to Donald Brannon from said Belknap
Distributorship through the use of the United States Mail, in violation of Title 18, Section 1341 of the United States Code.

FOURTH SCHEME TO DEFRAUD

59. On or about January, 1980, and for several consecutive preceding years before, Defendants devised an artifice and scheme to
defraud the Canadian Government of its import duties and in furtherance of such scheme did use the Unites States Mail Services
in violation Sec. 1341. Said Defendants Amway was convicted by the Government of Canada for such import duty violations,

INJURY TO PLAINTIFFS

60. Plaintiffs built their combined income to in excess of One Million Dollars ($1,000,000.00) per year and in doing so relied upon
the false promises and misrepresentations of Defendants and Amway. Based upon their rate of growth and projected income
over a reasonable number of years, Plaintiffs' loss of profits, past, present and future will be over $100,000,000.00, due to the
wrongful acts of Defendants, Plaintiffs are seeking treble damages under RICO , plus costs and reasonable attorney fees. Title
18s Sec. 1964(c).

SECOND RICO CLAIM OF RECOVERY

(Rico Violation Title 18, Section 1962(a))

61. Plaintiffs incorporate the allegations contained in paragraphs 1 through 60 of Plaintiffs' Complaint.

62. Plaintiffs state that, Defendants DeVos, Van Andel and Defendant Amway Corporation during the times set forth in Count
VI above received income derived directly or indirectly from a pattern of racketeering activity in which all said Defendants
participated as principals within the meaning of Section 21 Title 18, U.S.C. On or about the 2nd day of November, 1982, used or
invested, directly or indirectly, part of said income in the establishment and operation of Merchandise Productions, Inc. an
enterprise which is and has been engaged in Amway related activities which affects interstate commerces in violation of Title 18,
Sections 1962(a) U.S.C. Further, during the 10 year period covered by RICO, Defendants invested, directly or indirectly, part of
said income in the purchase of Peter Island, a resort for themselves and certain distributors, Mutual Broadcasting Company and
The Amway Grand Plaza, a commercial hotel, all of which were engaged in Amway related activities.

63. As a proximate result of said violations Plaintiffs suffered monetary loss in their competitive privately produced motivations
tape, rally and tool business in the amount of $100,000,000.00. Plaintiffs are seeking treble damages under RICO, plus costs and
reasonable attorney fees. Title 18s Sec. 1964(c).

COUNT VII
(Breach of Contract)

64. Plaintiffs reallege paragraphs 1 through 63, as if fully rewritten herein. Beginning in February, 1971, Plaintiff, Rick Setzer and
Sue Lynn Setzer, entered into a contract with Defendant, Amway, entitled "Distributorship Agreement" and said contract was
renewed each and every consecutive year thereafter through October, 1986, as required by Amway, pursuant to which Plaintiffs
agreed to market consumer products on behalf of Amway and to recruit build, train and motivate other distributors within
Plaintiffs' Distributor network.

65. Throughout that time, Plaintiffs and Defendants established a course of dealing which was embellished by Amway and its
principal shareholders and agents Rich DeVos and Jay Van Andel by their adoption of practices, procedures and policies, which
persuaded Plaintiffs to produce and sell educational and motivational materials. These educational and motivational materials
conferred a direct economic benefit upon Defendants in that, as a result of the production and sales of said materials, Amway
distributors were encouraged to work harder and to produce a greater sales volume of Amway products.

66. Throughout that time, it was Plaintiffs' intent to build for their future while Defendants continually represented to Plaintiffs that
Plaintiffs were in fact doing just that.

67. Defendants have now breached their contract with Plaintiffs by destroying Plaintiffs' ability to produce and sell educational
and motivational materials. Beginning on or about January, 1983 and continuing to the presents Defendants have discouraged the
distributors within Plaintiffs' organizations from purchasing the educational and motivational materials produced by Plaintiffs, while
encouraging said distributors instead to purchase such materials from the Defendants.

68. Under the terms of the contract between Plaintiffs and Defendants and the representations, policies and procedures of
Amway, the policies of the company were not to be changed without the consent of the Amway Distributors Board of Directors.
Defendants, in total disregard of this agreement, unilaterally changed the policies of the company.

69. Plaintiffs have performed all the conditions precedent to be performed on their part.

70. As a direct and proximate result of the breach of contracts Plaintiffs have sustained damages in the amount of $3,000,000.00,
and will sustain damages by way of lost profits in the future of $97,000,000.00. Plaintiffs are entitled to recover judgment against
Defendants, jointly and severally in the amount of $100,000,000.00, plus interest thereon at the maximum legal rate.

COUNT VIII:
(Fraud)

71. For their seventh cause of action, Plaintiffs reallege paragraphs 1 though 70, as if fully rewritten herein.

72. Defendants have perpetrated a fraud upon Plaintiffs in that: (a) Defendants represented to Plaintiffs that Plaintiffs could
continue to conduct, without interference, their tool, training and motivational business. (b) such representations were material (c)
such representations were intentional (d) such representations were false (e) Defendants knew that such representation would be
acted upon by Plaintiffs; (f) Plaintiffs did not know, nor did they have reason to know, that such representations were false; (g)
Plaintiffs reasonably relied upon the apparent truth of such representation by the Defendants; (h) Plaintiffs had the right to rely
thereon; and (I) Plaintiffs have sustained actual damages as a result of the fraud.

73. Plaintiffs are entitled to recover judgment against the Defendants, jointly and severally, in the amount of its actual damages
totaling $100,000,000.00, plus interest thereon at the maximum legal rate and punitive damages in amount to be determined by the
jury.

COUNT IX

74. For their Ninth cause of action, Plaintiffs reallege paragraphs 1 through 73, as if fully rewritten herein.

75. Plaintiffs, Rick Setzer, Sue Lynn Setzer entered into the Amway Distributor Agreement herein before described and by
reference incorporated herein, with all Defendants in or around February, 1971, with new contracts signed between the parties
each and every consecutive year thereafter thru October, 1986. Under the terms of the contract, Plaintiffs were provided with
their own independent business. Under the policies, procedures, and rules of Amway, Plaintiffs were permitted to organize
corporations to operate their respective businesses, so long as the actual persons listed as distributors were Rick and Sue Lynn
Setzer. Pursuant to said agreement, policies, procedures and rules, Rick and Sue Lynn Setzer created Setzer International,
Inc., Ambassadors International, Inc., Setzer & Associates, Inc., Setzer Enterprises, Inc., CSI Corporation and SDS Corporation.

76. Plaintiffs business, as provided under the terms of the contract, consisted of retail sales of Amway products by Plaintiffs and
by personally sponsoring, directly and indirectly, other Amway distributors. Pursuant to the terms of the contract, Plaintiffs would
derive profits from purchasing Amway products from the Defendants at wholesale cost and subsequently sell the same at retail
cost. The contract also provided Plaintiffs with an opportunity to derive substantial profits from the sponsorship of other Amway
distributors. Their profits would take the form of substantial percentage bonuses by aggregating Plaintiffs' wholesale purchases of
Amway products with purchases of the same by all Amway distributors sponsored directly or indirectly by Plaintiffs.

77. Throughout the contractual relationship between Plaintiffs and Defendants, the Defendants orally and in writing persuaded
Plaintiffs to develop their independently owned Amway business by sponsoring other prospective Amway Distributors through the
use of educational and motivational materials, inter alia, books, tape recorded communications, rallies and seminars.

78. In reliance on Defendants' written and oral representations, policies, procedures, rules, regulations and customary practices,
Plaintiffs, Rick Setzer, Sue Lynn Setzer, individually and as successors to Setzer & Associates, Inc., Setzer Enterprises, Inc. and
Plaintiffs, Setzer International, Inc. and its predecessors and Plaintiff Ambassadors International, Inc. expended great sums of
money and personal services to develop their own independent motivational and educational support business.

79. From February, 1971, to January, 1983, Plaintiffs developed a successful Amway Distributorship business and a successful
independent motivational support business, which derived substantial profits from the sale of the same.

80. In January, 1983, and continuously thereafter, through the present time, suddenly and without warning to Plaintiffs,
Defendants intentionally and maliciously set in motion a scheme designed to destroy Plaintiffs Amway Distributorship and
independent motivational and training support and tool business. Beginning in January and continuously thereafter to the present,
Defendants prepared tape recorded communications, correspondence and speeches designed to interfere with and eventually
destroy Plaintiffs' businesses and communicate the same to the Plaintiffs' Distributor network and secure the support and tool
business for Defendant, Amway.

81. From January, 1983, to the present, all Defendants have continuously acted in furtherance of their malicious scheme to
destroy Plaintiffs' business and divert the same to Defendant, Amway, to wit: the preparation and circulation of literature and tape
recorded communications to Amway distributors in the Setzer network, all of which was designed to intimidate and coerce said
distributors into ceasing their business relationships with Plaintiffs and their companies.

82. Defendants, Rick [sic] DeVos and Jay VanAndel, have for their personal benefit, maliciously and intentionally interfered with
the contractual relations between Plaintiffs and Defendant Amway Corporation and with Plaintiffs' educational and motivational
business and their contractual relationship with Plaintiffs' customers, thereby causing Plaintiffs to suffer monetary losses, both
past, present and future in the amount of $100,000,000.00. Plaintiffs are entitled to recover $100,000,000.00, plus
interest at the maximum legal rater plus costs, reasonable attorney fees and punitive damages as a jury may assess.

WHEREFORE, Plaintiffs demand judgment against Defendants on all claims as follows:

1. Compensatory damages in favor of Plaintiffs as their respective claims appear on Counts I, II, III, IV, V, VII, VIII, and IX,
plus interest and costs.

2. An accounting in order to determine the amount due Plaintiffs, Rick Setzer and Sue Lynn Setzer, for the bonuses and profit
sharing due them as alleged in the Complaint.

3. Threefold the damages actually sustained and the costs of suit, including a reasonable attorney's fee, pursuant to 18 USC, Sec.
1964 (c) with interest thereon at the maximum rate allowed by law on Count Six (6) of the Complaint.

4. Punitive damages against all Defendants according to law in such amounts as shall be determined by the jury.

5. An immediate injunction be issued prohibiting the Defendants, jointly and severally, and their respective agents, employees and
servants, from unreasonably interfering with Plaintiffs' Tools Seminar, Speaking, Literature and Support business.

The damages to which Plaintiffs are entitled, actual and punitive, exceed Ten Thousand Dollars ($10,000.00), exclusive of interest
and costs.

> > > > > > William J. Abraham
> > > > > > Rick J. Abraham
> > > > > > 24 North High Street
> > > > > > Columbus, Ohio 43215
> > > > > > Tele: (614) 221-5474
> > > > > > Attorneys for Plaintiffs

A JURY TRIAL IS DEMANDED

> > > > > > Mason A. Goldsmith of
> > > > > > Love, Thornton, Arnold &
> > > > > > Thomason
> > > > > > 410 E. Washington Street
> > > > > > P.O. Box 10045- F. S.
> > > > > > Greenville, SC 29603
> > > > > > Tele: (803) 242-6360
> > > > > > Attorney For Plaintiffs

March 28, 1988

CERTIFICATE OF SERVICE

The undersigned hereby certifies that a copy of the foregoing Second Amended Complaint has been mailed to Bradford W.
Wyche and David Freeman, Wyche, Burgess, Freeman & Parham, P.O. Box 10207, Greenville, S. C. 29603 and Michael Dallas,
7575 East Fulton Roads, Ada, Michigan 49355 this 28th day of March,1988.

`IN THE UNITED STATES DISTRICT COURT`
`FOR THE DISTRICT OF SOUTH CAROLINA`
`GREENVILLE DIVISION`

`Rick Setzer, Sue Lynn Setzer, )`
`Setzer International, Inc., )`
`and Ambassadors International, )`
`) ANSWER OF DEFENDANTS T0`
`Plaintiffs, ) SECOND AMENDED COMPLAINT`
`) AND COUNTERCLAIM OF DEFENDANT`
`vs. ) AMWAY CORPORATION AGAINST`
`) PLAINTIFFS`
`Amway Corporation, Richard )`
`M. DeVos and Jay Van Andel, ) Case No. 6:86-1898-3`
`)`
`Defendants. )`

The Defendants, answering the Second Amended Complaint, (hereinafter referred to as "Amended Complaint") of the Plaintiffs herein and by way of Counterclaim of the Defendant Amway Corporation against the Plaintiffs, would respectfully show unto the Court as follows:

FOR A FIRST DEFENSE

The Amended Complaint fails to state a claim upon which relief can be granted against the Defendants Richard M. DeVos and Jay Van Andel.

FOR A SECOND DEFENSE

The Amended Complaint against the Defendants Richard d M. DeVos and Jay Van Andel should be dismissed for lack of personal jurisdiction.

FOR A THIRD DEFENSE

1. Except where specifically admitted herein, all allegations of the Amended Complaint are hereby denied.

2. The Defendants admit Paragraph 1 of the Amended Complaint.

3. The Defendants lack information sufficient to form an opinion or belief with respect to the allegations of Paragraph 2 and Paragraph 3 of the Amended Complaint and therefore deny same and demand strict proof thereof.

4. The Defendants admit Paragraphs 4, 5, 6 and 7 of the Amended Complaint. The Defendants expressly deny, however, that they have violated any provision of Title IV of the Organized Crime Control Act of 1970 or of any other law.

5. The Defendants deny Paragraph 8 and 9 of the Amended Complaint.

6. In response to Paragraph 10 of the Amended Complaint, the Defendants would show that Exhibit A, attached hereto and made a part hereof, is a true and accurate description of Amway's business. The Defendants deny all allegations or Paragraph 10 which are inconsistent with Exhibit A.

7. In response to Paragraph 11 of the Amended Complaint, the Defendants would show that Exhibit A, attached hereto and made a part hereof, is a true and accurate description of Amway's business. The Defendants deny all allegations of Paragraph 11 which are inconsistent with Exhibit A.

8. In response to Paragraph 12 of the Amended Complaint, the Defendants admit that an Amway distributor is not an employee or servant of Amway but is an independent contractor. The Defendants further admit that the Plaintiffs became a "Triple Diamond Direct Distributor" in 1978 and have been entitled to receive, and have received, certain bonuses from Amway. Amway denies all remaining allegations of Paragraph 12.

9. The Defendants deny Paragraph 13 of the Amended Complaint.

10. In response to Paragraph 14 of the Amended Complaint, the Defendants incorporate Paragraphs 1 through 9 above.

11. In response to Paragraph 15 of the Amended Complaint, the Defendants would show that in January, 1985, the Plaintiffs presented to Amway a proposal whereby the Plaintiffs would acquire the Amway distributorship owned by Keith and Jimmie Lee Belknap (hereinafter referred to as "the Belknap Distributorship") for the principal sum of $270,000. The Plaintiffs expressly represented to Amway that all conditions applicable to the sale or transfer of a distributorship, as set forth in Amway's Code of Ethics and Rules of Conduct, to which the Plaintiffs had agreed to be bound, would be met. In reliance on such representation, Amway advanced the sum of $150,000 to the Plaintiffs and guaranteed a loan in the principal sum of $150,000 from the Michigan National Bank in Grand Rapids, Michigan (hereinafter referred to as the "Bank") to the Plaintiffs. The advance was paid by the Plaintiffs to Keith and Jimmie Lee Belknap as down payment of the purchase price for the Belknap Distributorship. The proceeds of the loan from the Bank were paid to Amway in reimbursement of its advance to the Plaintiffs.

The loan by the Bank was cross collateralized by the assets of the Amway distributorship owned and operated by the Plaintiffs, such that any default under the loan would entitle the Bank or Amway, as the case may be, to apply any of such assets held by the Bank or Amway against the default.

Shortly after execution of Amway's guarantee, the Plaintiffs requested that Amway deliver to them the confidential list of persons in the Belknap Distributorship. The Plaintiffs represented to Amway that the purpose of such request was to enable the Plaintiffs to contact the down line distributors in the Belknap Distributorship in order to obtain their "waivers of option" in connection with the Plaintiffs' acquisition of the distributorship, which waivers are expressly required under Amway's Code of Ethics and Rules of Conduct. In reliance on such representation, Amway released such list of distributors to the Plaintiffs.

The Plaintiffs, however, used the list not for the of obtaining waivers, but for the sole purpose of contacting persons in the Belknap Distributorship to market the Plaintiffs' own privately produced line of books, tapes and materials, in express violation of Amway's Code of Ethics and Rules of Conduct. Such actions on the part of the Plaintiffs created substantial confusion and disruption among the down line distributors in the Belknap Distributorship, causing Amway to sustain lost sales, damages to its corporate goodwill and other damages.

The Plaintiffs have refused, without any justification, to honor their obligations to the Bank, thereby causing Amway to have to honor its guarantee and to suffer losses and damages.

Such default by the Plaintiffs, under the terms of the Bank's loan documents, entitles Amway to apply any assets of the Plaintiffs held by Amway against the default.

The Defendants deny all remaining allegations of Paragraph 15.

12. In response to Paragraph 16 of the Amended Complaint, the Defendants would show that the Plaintiffs refused to comply with the conditions applicable to the sale or transfer of an Amway distributorship and, therefore, the Plaintiffs' acquisition of the Belknap Distributorship was never approved by Amway. On August 19, 1985, in order to clarify the legal status of the Belknap Distributorship, to reverse the seriously deteriorating condition of the distributorship and to comply with Amway's Code of Ethics, Rules of Conduct and long-standing practices and policies, Amway transferred the Belknap Distributorship to H. Don Brannon. The Defendants deny all remaining allegations of Paragraph 16.

13. The Defendants deny Paragraph 17 and Paragraph 18 of the Amended Complaint and expressly deny that the Plaintiffs are entitled to any recovery or relief against any of the Defendants.

14. In response to Paragraph 19 of the Amended Complaint, the Defendants incorporate Paragraphs 1 through 18 above.

15. The Defendants deny Paragraph 20 of the Amended Complaint.

16. In response to Paragraph 21 of the Amended Complaint, the Defendants expressly deny that the Plaintiffs and Brannon entered into a valid, bona fide partnership agreement. The Defendants admit that the entering into of a valid, bona fide partnership agreement with the selling distributor's sponsor will satisfy Amway's waiver rule, but the Defendants deny that the "Seltzer-Brannon Partnership Agreement" was valid and bona fide.

17. The Defendants deny Paragraph 22 of the Amended Complaint.

18. In response to Paragraph 23 of the Amended Complaint, the Defendants would show that on August 19, 1985, Amway approved the transfer of the distributorship to H. Don Brannon, effective January 17, 1985. The Defendants would show that the Plaintiffs became aware of this transfer in [sic] well in advance of August 19, 1985.

19. The Defendants deny Paragraph 24 of the Amended Complaint.

20. In response to Paragraph 25 of the Amended Complaint, the Defendants would show that Amway offered to assume the Setzers' obligations under their loan from the Bank in exchange for the assignment to Amway by the Setzers of whatever interest they may have had in the agreement for the purchase and sale of the Belknap Distributorship, but that the Setzers refused to do so.

21. In response to Paragraph 26 of The Amended Complaint, the Defendants would show that it was unnecessary to comply with the waiver rule because Brannon was the Belknaps' immediate upline.

22. The Defendants deny Paragraph 27, 28 and 29 of the Amended Complaint.

23. In response to Paragraph 30 of the Amended Complaint, the Defendants incorporate herein Paragraphs 1 through 22 above.

24. The Defendants deny Paragraphs 31 through 39 of the Amended Complaint.

25. Because Count VI has been dismissed by the Court, the Defendants are not required to answer Paragraphs 40 through 63 of the Amended Complaint. In any event, the Defendants deny all material allegations of said paragraphs.

26. In response to Paragraph 64 of the Amended Complaint, the Defendants incorporate herein Paragraph 1 through 25 above. The Defendants admit that the Setzers and Amway have entered into distributorship agreements continuously since 1971.

27. The Defendants deny Paragraphs 65 through 70 of the Amended Complaint.

28. Because Count VIII of the Amended Complaint has been dismissed, the Defendants are not required to answer Paragraphs 71 through 73 of the Amended Complaint. In any event, the Defendants deny the material allegations of said paragraphs.

29. In response to Paragraph 74 of the Amended Complaint, the Defendants incorporate herein Paragraphs 1 through 28 above.

30. In response to Paragraph 75 of the Amended Complaint, the Defendants admit that the Plaintiffs Rick Setzer and Sue Lynn Setzer entered into a Distributorship Agreement with Amway in February of 1971; that a Distributorship Agreement remains in effect as of this date; that as Amway distributors, the Plaintiffs operate their own business subject to the requirements and conditions set forth in Amway's Code of Ethics, Rules of Conduct and the Distributorship Agreement; that the Plaintiffs were permitted to organize corporations to operate other businesses in accordance with the requirements set forth in Amway's Code of Ethics, Rules of Conduct and the Distributorship Agreement. The Defendants deny all other allegations of Paragraph 75 of the Amended Complaint.

31. In response to Paragraph 76 of the Amended Complaint, the Defendants would show that the Distributorship Agreement speaks for itself.

32. The Defendants deny Paragraphs 77 through 82 of the Amended Complaint. The Defendants expressly deny that the Plaintiffs are entitled to any relief or recovery against any of the Defendants.

FOR A FOURTH DEFENSE

1. All allegations of Paragraphs 1 through 32 of the Third Defense are incorporated herein and made a part hereof.

2. To the extent the Plaintiffs are entitled to any recovery against the Defendants, such recovery should be reduced or offset by the amounts recovered by the Defendant Amway Corporation on its Counterclaim.

FOR A FIFTH DEFENSE

1. All allegations of Paragraphs 1 through 32 of the Third Defense are incorporated herein and made a part hereof.

2. The Plaintiffs are barred by the doctrine of equitable estoppel from any recovery against the Defendants.

FOR A SIXTH DEFENSE

1. All allegations of Paragraphs I through 32 of the Third Defense are incorporated herein and made a part hereof.

2. The Plaintiffs are barred by recovery by the doctrine of waiver from any recovery against the Defendants.

FOR A SEVENTH DEFENSE

1. All allegations of Paragraphs 1 through 32 of the Third Defense are incorporated herein and made a part hereof.

2. The Plaintiffs are barred by the "clean hands" doctrine from any recovery against the Defendants.

COUNTERCLAIM BY THE DEFENDANT AMWAY CORPORATION
AGAINST THE PLAINTIFFS

For a First Cause of Action Against Rick Setzer and Sue Lynn Setzer
(Right of Subrogation)

1. The Defendant Amway Corporation (hereinafter referred to as "Amway") is a corporation organized and existing under the laws of the State of Michigan with its principal place of business in Ada, Michigan.

2. The Plaintiffs Rick Setzer and Sue Lynn Setzer (hereinafter referred to jointly as the "Setzers"), are citizens and residents of Greenville, South Carolina.

3. This Court has jurisdiction of the subject matter of this First Cause of Action in that there is diversity of citizenship between Amway and the Setzers and the Matter in controversy exceeds, exclusive of interest and costs, the sum of $10,000.

4. In January, 1985, the Setzers requested that Amway guarantee a loan from the Michigan National Bank (hereinafter referred to as "the Bank") to the Setzers in the principal sum of $150,000 to enable the Setzers to acquire an Amway Distributorship owned by Keith and Jimmie Lee Belknap (hereinafter referred to as the "Belknap Distributorship"). The Setzers agreed that they would comply with all conditions applicable to the sale or transfer of the Belknap Distributorship, as set forth in Amway's Code of Ethics and Rules of Conduct.

Amway agreed to and did guarantee said $150,000 loan from the Bank to the Setzers.

6. Amway advanced the sum of $150,000 to the Setzers which was paid by the Setzers to Keith and Jimmie Lee Belknap as down payment of the purchase price for the Belknap Distributorship, and the proceeds of the loan from the Bank were paid to Amway in reimbursement of its advance to the Setzers.

7. The Setzers have refused, without any justification, to comply with the conditions applicable to the sale or transfer of an Amway distributorship and have further refused, without any justification, to honor their obligations to the Bank.

8. Pursuant to its guarantee, Amway paid the Bank interest on the loan from the Bank to the Setzers beginning on or about May 30, 1985.

9. On January 30, 1987, the Bank wrote the Setzers and Amway, stating that three loans Made by the Bank to the Setzers, including the loan described in Paragraph 4 above, were in default and demanded payment in full of all three loans. Amway Had guaranteed the payment of all such loans.

10. On February 23, 1987, Amway notified the Setzers that unless the Setzers made full payment of said three loans by February 27, 1987, Amway would do so under its guarantees, without prejudice to all legal and equitable rights available to Amway as a result of such payment.

11. The Setzers refused, without any justification whatsoever, to pay any amount to the Bank.

12. On February 26, 1987, Amway paid the bank in full all three loans to the Setzers. The total amount paid by Amway to the Bank in payment of the Setzers' loans is $292,779.93.

13. Having paid the loans to the Bank, Amway became subrogated to all rights and remedies of the Bank against the Setzers.

14. Amway is entitled to recover from the Setzers all amounts it has been required to pay to the Bank in repayment of the loans to the Setzers, plus interest.

For a Second Cause of Action Against the Plaintiffs Rick Setzer and Sue Lynn Setzer
(Fraudulent Misrepresentation)

1. All allegations of the First Cause of Action are incorporated herein to the extent consistent herewith.

2. The Setzers represented to Amway that they would comply with all conditions and requirements applicable to the sale or transfer of distributorships.

3. Such representation was made fraudulently in that (1) such representation was false; (2) such representation was material; (3) the Setzers knew of the falsity of such representation; (4) the Setzers intended that such representation would be acted upon by Amway; (5) Amway was ignorant Of the falsity of such representation; (6) Amway relied on the truth of such representation by the Setzers; (7) Amway had the right to rely thereon; and (8) Amway has sustained actual damages resulting from such fraudulent and deceitful representations.

4. Amway is entitled to recover judgment against the Setzers, jointly and severally, in the amount of its actual damages, plus interest thereon at the maximum legal rate, and punitive damages in an amount to be determined by the jury.

For a Third Cause of Action Against the Plaintiffs Rick Setzer and Sue Lynn Setzer
(Negligent Misrepresentation)

1. The First Cause of Action is incorporated herein to the extent consistent herewith.

2. The representation of the Setzers, as described in Paragraph 2 of the Second Cause of Action, was made negligently.

3. As a proximate result of such negligent representations, Amway has sustained actual damages which it is entitled to recover from the Setzers.

For a Fourth Cause of Action Against the Plaintiffs Rick Setzer and Sue Lynn Setzer and For a First Cause of Action Against the Plaintiffs Ambassadors International, Inc. and Setzer International, Inc.
(Breach of Contract)

1. Paragraphs 1 and 2 of the First Cause of Action are incorporated herein in their entirety.

2. The Plaintiffs Setzer International, Inc. and Ambassadors International, Inc., upon information and belief, are corporations organized and existing under the laws of the State of South Carolina with its principal place of business in Greenville, South Carolina.

3. The Plaintiffs Rick Setzer and Sue Lynn Setzer are subject to and bound by the Code of Ethics and Rules of Conduct of Amway Corporation.

4. The Code of Ethics provides, among other things, that:

> (a) "I [Amway distributor] will present Amway products and the Amway business opportunity to my customers and prospects in a truthful and honest manner, and I will make only such claims as are sanctioned in official Amway literature"; and (b) "I (Amway distributor] will use only Amway authorized and produced literature concerning the Amway Sales and Marketing Plan and Amway products since I know such literature is legally correct"

5. The Rules of Conduct provide, among other things, that:

> (a) "In presenting the Amway Sales and Marketing Plan to a prospective distributor, the sponsoring distributor must comply with the following guidelines during the presentation of the Amway Sales and Marketing Plan:

> > 1. Must disclose the average profits, earnings and sales figures and percentages as published from time to time by Amway.

> > 2. Must use only Amway-produced and Amway-approved literature....";

> (b) "Distributors may produce, or have produced for them, literature, merchandising or sponsoring aids, tape recordings, end/or tape cassettes which are purely motivational as to content and which do not include representations as to potential earnings or other financial benefits to be earned by Amway distributors, but which relate solely to motivational techniques, testimonials relating to non-financial benefits of Amway, and other similar subjects, except, however, that a distributor may relate his own personal experiences, including the income which he has in fact realized from the operation of his own distributorship business as the result of the sale of Amway products"; and

> (c) "No Amway distributor may produce, sell and/or distribute any literature, merchandising or sponsoring aids, tape recordings, tape cassettes, or other material which is deceptively similar to literature or material published and distributed by Amway to its distributors, or which could create the impression on a reasonable mind that such literature or material emanated from Amway itself or that its publication or distribution was authorized by Amway."

6. Amway is informed and believes that the Plaintiffs have produced, distributed and sold, and are producing, distributing and selling, literature, tape cassettes, tape recordings and other materials which violate the Code of Ethics and Rules of Conduct, including those set forth in Paragraphs 3 and 4 above.

An example of such violative material is the document attached hereto and made a part hereof as Exhibit B. This document is not Amway-produced or Amway-approved, does not disclose average profits and earnings, includes representations as to potential earnings and benefits and leaves the impression that it is authorized by Amway, all in violation of Amway's Code of Ethics and Rules of Conduct.

7. The document attached hereto as Exhibit B contains representations and statements that violate applicable federal and state law and regulation.

8. The Plaintiffs' violations of the Code of Ethics and Rules of Conduct have caused Amway to sustain substantial losses and damages in the sum of at least One Million Dollars ($1,000,000.00) and subject Amway to the possibility of investigation and/or enforcement actions being brought against it by state and federal agencies.

9. The Plaintiffs are continuing to produce, distribute and sell materials which violate Amway's Code of Ethics and Rules of Conduct and applicable law and regulation. Such continuing conduct will cause irreparable injury to Amway for which no adequate remedy at law exists.

10. Amway is entitled to judgment against the Plaintiffs, jointly and severally, in the amount of its losses and damages and to an immediate injunction prohibiting the Plaintiffs from producing and distributing literature, tape cassettes, tape recordings and other materials which violate Amway's Code of Ethics and Rules of Conduct.

For a Fifth Cause of Action Against the Plaintiffs Rick Setzer and Sue Lynn Setzer and For a Second Cause of Action Against the Plaintiffs Ambassadors International, Inc. and Setzer International Inc.
(Unfair Competition and Trademark, Name and Copyright Infringement)

1. The Fourth Cause of Action is incorporated herein in its entirety.

2. The aforesaid acts of the Plaintiffs constitute unfair competition and an infringement upon Amway's duly registered trademark, name and copyright, with the intent to deceive the public into believing that the materials produced and sold by the Plaintiffs were produced, created or approved by Amway when, in fact, they were not.

3. The Plaintiffs' aforesaid acts have created confusion and are likely to continue to create confusion in the minds of a substantial portion of the distributors within Amway's system of marketing and distribution.

4. Amway produces and sells materials in direct competition with the infringing materials sold by the plaintiffs. Amway realizes income and profits from the sale of its materials sold in competition with the unauthorized and illegal materials of the Plaintiffs. The Plaintiffs' acts, therefore, have diverted profits and royalties from Amway to the Plaintiffs.

5. The Plaintiffs' aforesaid acts have created a likelihood of injury to the business reputation of Amway and a dilution of the distinctive quality of Amway's name.

6. As a result of the Plaintiffs' aforesaid acts, Amway has been damaged by the loss of royalties and profits and the loss of valuable goodwill in the sum of at least One Million Dollars ($1,000,000.00).

7. Amway is entitled to judgment against the Plaintiffs, jointly and severally, in the amount of its damages and to an immediate injunction prohibiting the Plaintiffs from continuing to engage in unfair competition and in the infringement upon Amway's duly registered trademark, name and copyright.

WHEREFORE, Defendants pray:

1. That the Amended Complaint against them be dismissed, with costs;

2. That judgment be entered in favor of Defendant Amway Corporation against the Plaintiffs Rick Setzer and Sue Lynn Setzer, jointly and severally, for actual damages, on the First Cause of Action of its Counterclaim;

3. That judgment be entered in favor of Defendant Amway Corporation against Plaintiffs Rick Setzer and Sue Lynn Setzer, jointly and severally, for actual and punitive or exemplary damages, on the Second Cause of Action of its Counterclaim or, alternatively, for actual damages on the Third Cause of Action of its Counterclaim;

4. With respect to the Fourth Cause of Action of its Counterclaim, that judgment be entered against Plaintiffs, jointly and severally, for actual and punitive or exemplary damages and that an immediate injunction be issued prohibiting all Plaintiffs, jointly and severally, and their respective agents, employees and servants, from producing, distributing and selling literature, tape cassettes, tape recordings and other materials which violate Amway's Code of Ethics and Rules of Conduct;

5. With respect to the Fifth Cause of Action of its Counterclaim, that (a) Amway recover judgment against the Plaintiffs, jointly and severally, in the total amount of its losses and damages, and (b) that an immediate injunction be issued prohibiting the Plaintiffs, jointly and severally, and their respective agents, employees and servants, from continuing to engage in unfair competition and in the infringement upon Amway's duly registered trademark, name and copyright.

6. For such other and further relief as this Court may deem just and proper.

WYCHE, BURGESS, FREEMAN & PARHAM, P.A.
By: David L. Freeman
By: Bradford W. Wyche

Post Office Box 10207
Greenville, SC 29603
(803) 242-3131

Attorneys for the Defendants

Dated: April 25, 1988