34. The P&G/Schwartz web site did, indeed, have its intended effect during this period, just as it boasted. As one example, in May 1997 a direct distributor in South Carolina lost the most profitable distributor in his organization after false and misleading information from the P&G/Schwartz web site was distributed throughout his organization. 35. The South Carolina Amway distributor and one of the distributors in his organization had contacted prospective distributors about starting a distributorship. The prospective distributors were a married couple with hundreds of friends and relatives in the Philippines, thus representing an excellent prospect to expand the distributorship internationally. 36. The Philippine couple agreed to attend a business seminar in Columbia, South Carolina, to learn more about the Amway business and they were very excited about starting an Amway distributorship. 37. Prior to the seminar, however, the wife printed off pages of negative, false and misleading information about Amway from the P&G/Schwartz web site. The false and misleading information, among other things, falsely alleged that distributors only made money by forcing people in their organization to buy motivational tapes and materials at inflated prices. As a result of the false information, the couple lost all interest in starting a distributorship and began distributing the pages of negative and false information to people in the South Carolina Amway distributor's group.

38. Within 60 days of this incident, the South Carolina Amway distributor's business and profits had been cut roughly in half, as the people in his distributorship organization who had received the Schwartz information dropped out or became inactive in the group.

39. Moreover, following this incident the South Carolina Amway distributor made numerous business presentations to distributor prospects. It is not uncommon for the prospects to be extremely interested in a distributorship after the initial presentation, However, when the Amway Direct distributor returned for follow up meetings, he frequently was told, by prospects that after reviewing the negative, false, and misleading information on the Internet about Amway, they were no longer interested in the business. This Internet information is, upon information and belief, from the P&G/Schwartz web site.

40. These are just a few of the many examples of distributors who, upon information and belief, have lost business and business opportunities because of the negative, false, and misleading information published on the P&G/Schwartz web site, thus causing Amway lost profits, lost business opportunities, and lost goodwill.

41. During the course of its defense of litigation brought by P&G, Amway observed that documents pertaining to that litigation appeared on the Schwartz web site so quickly that Amway suspected a covert connection between the Schwartz web site and P&G. Amway sought discovery from P&G on this subject, but P&G revised, claiming that any relationship it might have with Schwartz was protected work product. Amway then attempted to seek discovery from Schwartz by deposition pursuant to subpoena. P&G hired attorneys to represent Schwartz and resist this discovery. The objections of Schwartz and P&G were brought before federal courts in Utah and Oregon. Both courts rejected their arguments, and Schwartz was required to reveal that P&G had supported Schwartz by making consulting payments, by collecting and sending boxes of documents to Schwartz, and by paying Schwartz's legal fees.

42. On approximately December 8, 1997, in an effort to mislead and induce others to republish his false and misleading information, Schwartz claimed to be closing the web site and temporarily removed the negative, false, and misleading information about Amway from the P&G/Schwartz web site. In its place, however, he posted a false message that the negative information about Amway was being removed because of "the threat of legal harassment by Amway." The end result was further damage to Amway in the form of lost profits, lost business opportunities, and lost goodwill, caused by the P&G/Schwartz web site.

43. Indeed, Schwartz used this false message on the P&G/Schwartz web site, to induce his readers to republish and spread the negative, false, and misleading information about Amway on other web sites. As he stated:

Many of you who have visited this site in the past have downloaded some or all of the information I've compiled and made available here. I hereby give my permission for anyone to use this information in any way they choose, either on a web site of their own or to disseminate it by other means. It is my hope that those who have set up other Amway Information web sites will continue to make this information available so that those considering investing their time and money in Amway will have the opportunity to see "the untold story" - the facts and opinions that Amway and Amway distributors have for so long tried to keep hidden.

44. Schwartz also modified the P&G/Schwartz web site to include vulgar, inflammatory, e-mail messages that were provoked by Schwartz's false and misleading message concerning the reasons he was removing the information from the web site, Ironically, after attempting unsuccessfully to conceal the extent of his covert relationship, with P&G, Schwartz fomented hate rhetoric about Amway by claiming that Amway was interfering with free speech. Examples of such hate rhetoric Schwartz solicited include the following:

a. One such e-mail asks if Amway "sicked the Mafia on, [him]" because he "wouldn't put it past [Arnway]."

b. Another e-mail responded to Schwartz's message about, Amway by asking, "can you spell F-A-S-C-1-S-M?

c. Another offensive message states:

What the hell is going on??? Amway shut YOU down?, Incredible. Welcome to Amerika. Jesus H. Khrist. This is insane.

I'd love to put up the info for ya, I have an account with * I'm not using space on, but if Amway is flexing it's corporate muscle to stifle freedom of speech, would it be worth it? I for one would like to sink those bastards once and for all. Big time.

45. The message from Schwartz and posting of offensive e-mail worked. Two days after posting the message about closing the site, Schwartz announced that another web site was now posting the negative, false, and misleading information that had previously appeared on the P&G/Schwartz web site. Thereafter, the negative, false, and misleading information appeared on numerous other web sites that were linked to the P&G/Schwartz web site. Thus, after ostensibly removing the negative content of the P&G/Schwartz web site, it actually grew in size and nefarious content and caused Amway to lose additional profits, business opportunities, and goodwill.

46. Since the so-called "shut down" of the P&G/Schwartz web site sometime in the Fall of 1998, the site again started posting the negative, false and misleading information about Amway that Schwartz encouraged others to post when he temporarily removed the information from the site. This information continues to be outrageously negative, false and misleading. Apparently unable to forego outrageous and childish personal attacks, the P&G/Schwartz web site currently calls Amway's deputy general counsel "a whore lacking in credibility and integrity" and labels him Amway's "Official Spokesweasle" [sic] More substantively, but equally outrageously, the P&G/Schwartz web site recently posted an article that accuses Amway of "depriving distributors of constitutional rights" merely because it includes an arbitration clause in agreements with independent Amway distributors. As a result, Amway continues to suffer lost profits, lost business opportunities and lost goodwill as a result of the negative, false and misleading information posted on the P&G/Schwartz web site.

This page updated Jul-26-99