life by design pyramid scheme

All in all, he managed to defraud people out of over $65 billion dollars. The scheme typically collapses once no more fee-paying members can be found to support the existing members with their payments. Definition of Pyramid Scheme Noun A dishonest business scheme in people pay to join, and profit from payments made by subsequent recruits. According to the Federal Trade Commission, pyramid schemes promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public.. Bernie Madoffs investment scam is probably the most famous Ponzi scheme in history. And obviously, thank you for your effort! The scheme starts with a single point on top where the original members exist and becomes progressively wider toward the bottom as people are recruited by every level of recruits. There is no indication of students being paid to recruit people to work under them. [18], The U.S. Federal Trade Commission warns against becoming involved "in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products. In a pyramid scheme, an organization compels individuals who wish to join to make a payment. Each of these new members usually pay an entrance fee, which is used to pay the people above them. Eventually, most distributors find that no matter how hard they work, they cant sell enough inventory or recruit enough people to make money. The lack of regulatory laws allowed those pyramids to grow excessively for several years. At the top of the pyramid, the founder or founders are essentially receiving fees from every participant below them, said Jonathan Perlman, an attorney with the Miami law firm Genovese Joblove & Battista. Chain mail has been around forever, but the chain email versionwhich promises to make participants a certain amount of cashis an illegal version of the traditional pyramid scheme. In this scheme, participants purchased a "license," entitling them to commissions when they sold Big Co-op products to others, including licenses to new participants. Emphasis on selling franchises rather than the product eventually leads to a point where the supply of potential investors is exhausted and the pyramid collapses.[7]. Definition, Types, and Example, What Is Accounting Fraud? E. Napoletano is a former registered financial advisor and award-winning author and journalist. Therefore, a pyramid scheme is characterized by a few people (including the creators of the scheme) making large amounts of money, while subsequent members lose money. Usually I like to critisize but now I really agree with every word and I have even nothing to addcomment more. Ponzi schemesare investment cons that work by robbing Peter to pay Paul. This is one of the few companies investigated and sued by the Federal Trade Commission that was shut down as a result. For business inquiries please Email: filip @directsellingstar.com. Since matrix schemes follow the same laws of geometric progression as pyramids, they are subsequently as doomed to collapse. It is a felony in the U.S. to recruit participants into pyramid schemes. Reach and History, Securities and Exchange Commission (SEC) Defined, How It Works, Financial Crimes Enforcement Network (FinCEN), Anti Money Laundering (AML) Definition: Its History and How It Works, Compliance Department: Definition, Role, and Duties, Compliance Officer: Definition, Job Duties, and How to Become One, What Is an MLM? [65], On 12 November 2008, riots broke out in the municipalities of Pasto, Tumaco, Popayn and Santander de Quilichao, Colombia, after the collapse of several pyramid schemes. This second investor is required to invest a certain sum of money to be paid to the initial investor. Please take a look at a company called PSI. Often, MLMs require sellers to purchase an initial package of some sort. https://kraftzone.tk/w/index.php?title=User:SYZRichard What Is a Pyramid Scheme? White-collar crime is a nonviolent crime characterized by deceit to obtain or avoid losing money, or to gain a personal or business advantage. Step 1: The originator An individual or small group at the top of the pyramid scheme puts up a small amount of money, or in many cases, no money at all, for a get-rich-quick opportunity, then. Pretty nice post. This may be a set of articles of clothing which they then sell to customers, or this may be a package of samples that they distribute to potential customers. Instead, it encouraged people to pay $2000 for the title of Supervisor and purchase $5400 in Koscot cosmetics, and then to earn bonuses by recruiting others to make the same investments.. Pyramid schemes are illegal in many countries. Pyramid schemes are a type of investment fraud where distributors are incentivized to recruit other distributors. Do you know of a company called breaglo or something like that? [1][9][10][11], According to the U.S. Federal Trade Commission legitimate MLM businesses are distinguished from pyramid schemes by participants making money primarily from product sales, rather than recruitment:[12], Not all multi-level marketing plans are legitimate. While often confused with each other, pyramid schemes and Ponzi schemes are different. This crime may result in four years in prison and a fine of $5,000. Holiday Magic was sued by Avon Products in 1973. These include white papers, government data, original reporting, and interviews with industry experts. The message says theres something wrong with Its Cyber Security Awareness month, so the tricks scammers use to steal our personal information are on our minds. 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As you dive into your human design chart, you will discover what makes you tick (and not) in every facet of your life . They may not necessarily adopt a pyramid scheme's hierarchical structure but they do promise high returns to existing investors. A pyramid scheme is a fraudulent and unsustainable investment pitch that relies on promising unrealistic returns from imaginary investments. The income flows up to the founders and earlier members. In April 2010, the owners of the Big Co-op Inc. internet shopping website were found guilty of operating a pyramid scheme in California. In 2004, a nutrition company offered a life-changing opportunity to earn a full-time income for part-time work. The founders receive fees and sales commissions from the other participants, plus revenue from the sale of inventory. Other MLMs may not be a good fit for your interests and lifestyle. How much did you borrow? Organizers can further profit by starting a scheme with a queue with shill names that must be cleared out before genuine people get to the front. Your website is extremely helpful. For the directors, the scheme is potentially lucrativewhether or not they do any work, the organization's membership has a strong incentive to continue recruiting and funneling money to the top of the pyramid. recruitment over retail sales), or "product-based pyramid schemes." A summary version of the report - "FIVE RED FLAGS: five causative and defining characteristics of recruiting MLMs, or product-based pyramid schemes" - was presented to the Economic Crime Summit Conferences in 2002 and 2004. There were only two steps to get started: purchase a $500 kit and recruit two more members. Each level of the pyramid is much larger than the one before it. How many people have you recruited? Thanks!! The promoters of a pyramid scheme may try to recruit you with pitches about what youll earn. Ability to make 10-40k+ month. On the surface, a pyramid scheme appears to be a legitimate company selling products or services, but the core goal is always to grow the number of participants in the scheme rather than grow product sales. Madoff pooled money from over 5,000 investors without ever any of the funds in the market. In this model each person must recruit two others, but the ease of achieving this is offset because the depth required to recoup any money also increases. As consumer harm is both inevitable and widespread in pyramid scheme fraud, governments around the world have attempted to prevent and punish this type of fraudulent behavior. Peru, Philippines,[49] Poland,[50] Portugal, Romania,[51] Russian Federation, Serbia,[52] South Africa,[53] Singapore,[54] Spain, Ethiopia, Sri Lanka,[55] Sweden,[56] Switzerland, Taiwan, Thailand,[57] Turkey,[58] Ukraine,[59] the United Kingdom,[60] and the United States. I am having a look ahead for your subsequent put up, Ill attempt to get the hang of it! FTC Chairwoman Edith Ramirez announces the settlement with Herbalife. The emphasis in pyramid schemes is on recruiting new members. This way, a pyramid-shaped hierarchy is formed and hence, the name. Spin-off schemes called "Speedball" and "People in Profit" prompted a number of violent incidents and calls were made by politicians to tighten existing legislation. For the Teen Titans Go! The club creator is also told to teach the investment club members how to start their own clubs, for which they will receive compensation and then pass on compensation to the initial club creator, and so on.. The early investors actually get paid those big. How many did you recruit last year? In a pyramid scheme, as in a chain letter, the money at the top is made from the . Distributors get paid for those products and services of the MLM that they sell. "Multi-Level Marketing Businesses and Pyramid Schemes. There was just one problem -- the vast majority of members earned less than they paid in. You can learn more about the standards we follow in producing accurate, unbiased content in our. 6 Ways to Avoid an Investment Ponzi Scheme, The Investopedia Guide to Watching 'Billions'. The scheme, which started in July 2012, collapsed in September 2014, and its two founders, Malaysian brothers Peter and Philip Ong, became uncontactable. You really make it appear really easy along with your presentation however I Therefore, the participants in the bottom three tiers of the pyramid lose their money if the scheme collapses. They claim that all of their products are made in the USA. In recent years, the SEC filed charges to stop a pyramid scheme masquerading as an MLM program. Many pyramids are more sophisticated than the simple model. I know this if off topic but Im looking into starting my own blog and was curious what all is needed to Leadership Dynamics and Mind Dynamics ceased operation in 1974. They sell products or services through person-to-person sales, and pay commissions sales commissions up the chain. The SEC alleged that CKB posed as a very profitable MLM company that made money selling online educational courses for children. The scheme requires a person to recruit two others, who must each recruit two others, and so on. It seems too complicated and very extensive for me. They're represented by the level directly below him on the pyramid. Your financial situation is unique and the products and services we review may not be right for your circumstances. For a pyramid scheme to make money for everyone who enrolls in it, it would have to expand indefinitely. Little attention is paid to actually marketing and selling products. This ultimately can strain relationships. More often it is the case that rumors and investigations begin and companies simply dissolve under pressure. Life By Design | We believe every human being is designed to be extraordinary Main menu Podcast Eat By Design Coaching 5 Signs You're Deficient in Magnesium Eat By Design There's good reason to believe you're deficient in magnesium. People will invariably lose their money. In most cases, orchestrators of a Ponzi scheme only ask for a single investment, with big returns promised at a later date. In December 2016, Vemma agreed to a $238million settlement with the FTC, which banned the company from "pyramid scheme practices" including recruitment-focused business ventures, deceptive income claims, and unsubstantiated health claims. have found something that helped me. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit; as such, pyramid schemes are unsustainable and often illegal. All Rights Reserved. Financial shenanigans are actions designed to misrepresent the true financial performance or financial position of a company or entity. In 2000, the FTC issued a notice that Equinox had settled a claim outside of court, agreeing to pay $40,000,000 in restitution. Are you sure you want to rest your choices? Commissions do not affect our editors' opinions or evaluations. There was just one problem -- the vast majority of members earned less than they paid in. Founded as an MLM company in 2004, BurnLounge was an online music store. You also may have to pay repeated fees for other items, like training sessions or expensive marketing materials. Madoff died in prison on April 14, 2021. The office falsely parades itself as a salary based, individually driven opportunity, and is in reality nothing more than a pyramid commission based scheme, that drains individuals of their personal drive and ambitions. Additionally, in a Ponzi scheme, investors are not asked to recruit others, nor are they told where their payoff would come from. Below, we will explore the topic more in-depth and reveal a list of companies that were shut down as a result. The Criminal Court handed down prison terms totaling 12,265 to 12,267 years to 22 people convicted over the scheme, which conned about 120,000 people out of more than 20billion baht. Whichever euphemism is used, there are 15 total people in four tiers (1 + 2 + 4 + 8) in the schemewith the Airplane Game as the example, the person at the top of this tree is the "captain", the two below are "co-pilots", the four below are "crew", and the bottom eight joiners are the "passengers". Another instance was called the "Original Dinner Party" which labeled the tiers as "dessert", "main course", "side salad", and "appetizer". Editorial Note: We earn a commission from partner links on Forbes Advisor. These factors are causative in that, taken [23] Multi-level marketing lobbying groups have pressured US government regulators to maintain the legal status of such schemes. This re-imagining of the old Airplane/8-ball model is making a resurgence on social media platforms such as Instagram and Zoom. [75][76], In March 2017, Ufun Store registered as an online business for its members as a direct-sales company was declared operating a pyramid scheme in Thailand. Those investors invite their friends, business associates and relatives to join and invest in the scheme. For example, ten joiners may be required for the person at the front to receive their item and leave the queue. I just stumbled upon your blog and wanted to say that Ive really enjoyed surfing around your blog posts. And they said I wouldn't get paid until 30-90 days . Despite the work of governments and consumer groups, people around the world continue to particip Only students who are 13 years of age or older can create a TED-Ed account. So if the buy-in were $5,000, they would receive $40,000, paid for by the first eight investors. Before sharing sensitive information, make sure youre on a federal government site. A pyramid scheme is a scam where a so-called marketing company promises to help you earn big profits in exchange for recruiting new participants into the scheme. Fantastic web site. Have you borrowed money or used your credit card to fund your business? This compensation comes from two main sources. A portion of those fees is paid on to those in the top layers of the pyramid. Heres a look at how pyramid schemes work, and how to tell them apart from an MLM or a Ponzi scheme. Pyramid schemes rely on income from recruitment fees and not, as participants may believe, from the sale of actual goods or services with real value. As tempting as it may . Thanks. Ellis was later convicted of lying to the FDA about the evidence regarding the dangers of ephedra, and he and the Metabolife company were both convicted of income tax evasion, leading to the dissolving of the company in 2005. The profit margin for sellers was low. A good businessperson needs those answers. You might be using an unsupported or outdated browser. The early investors actually get paid those big returns, which leads them to recommend the scheme to others. The small number of participants at the top of the pyramid scheme make large amounts of money by harvesting commissions and fees from the layers of salespeople and distributors recruited to work below them. One version called the Abundance Fractal uses the four elements as the names of tiers: "Fire", "Air", "Earth", and "Water". What Is a Pyramid Scheme? Though, in the end, the FTC determined that Herbalife was not a pyramid scheme but that they rather needed to change some of their business practices. Stacie Bosley explains what a pyramid scheme is and how to spot one. Some multi-level marketing plans have been classified as pyramid schemes.[1]. Im here in Fairbanks Alaska and learned the best thing and sometimes the only one is to Speak up and inform everyone you can buy spilling there bad actions all around town and warning people of how easy you can be taken down by ruthless people like this, made comment and no responce your site seems out dated, Your email address will not be published. Who Was Charles Ponzi? Pyramid schemes and illegal Ponzi schemes share certain similarities, but here are the big differences. According to the hard-sell pitches made at recruitment events, those bold enough to take the pyramid plunge will receive substantial cash from the recruits below them. This cycle continues. The people working for pyramid schemes try to promote the actual company instead of the product they are selling. Please try again later. The scheme organizer profits because the income from joiners far exceeds the cost of sending out the item to the person at the front. [77], The Airplane Game scheme resurfaced in 2020 as a savings club by the name of the Blessing Loom, Blessing Circle, Sending Flower, Gifting Flower, and so on. Thanks for wonderful information I was looking That means youre selling directly to other people, maybe from your home, a customers home, or online. A charismatic young man with a shock of black hair, a hip beard, and a toothpaste-ad grin, Morton gained MLM fame for his high-pressure tactics recruiting college-age youth for an MLM company. For doing this, the schemer promises the investment club creator a cut of each dollar that club members invest, says Perlman. You may even have to buy products before you're eligible to be paid or get certain bonuses. In February 2011, the Arizona Corporation Commission announced that Nouveau Riche had been fined nearly $6million for defrauding over 100 investors with unregistered deed of trust investments. Is there a company that you can order products from that sells made in the USA without having to join them? one of the Commissions first cases was In re Koscot Interplanetary, Inc., which involved a company that offered the opportunity to become a Beauty Advisor and sell cosmetics. A pyramid scheme is a business model that recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products. The model works by asking new investors to make an upfront payment so that they can be allowed to join the scheme. In this case (FFL) they are actively trying for you to recruit yes.. but you are also learning the trade and writing business legitimately getting paid by the insurance company not the agency itself. Anyone that knows the solution will you kindly respond? To get the best possible experience please use the latest version of Chrome, Firefox, Safari, or Microsoft Edge to view this website. In a Ponzi scheme, however, participants are promised returns on "investments", supposedly into stocks or goods, but which are actually paid for by new investors, while a central leading figure takes a portion as profit. In a pyramid scheme, an initial investor recruits a second investor to work under him. Fortune Hi-Tech Marketing was founded as an MLM in 2001 by Thomas Mills and Paul Orberson in Lexington, Kentucky. The purpose of this article is to help you determine if the agency you're interested in joining is actually a multi-level marketing organization or, as it's more commonly known, a "pyramid scheme.". It includes families and broadcasting and seems like a pyramid scheme. We had been there to tell him what we wanted and how we wanted it and he produced the changes. MLM companies sell their products or services through person-to-person sales. What Is Fraud? Recently, the huge MLM company Herbalife received much negative press amid allegations that it is a pyramid scheme. Here is a list of companies considered to be pyramid schemes, a pyramid scheme company list if you will. Nouveau Riche closed on its own on December 31, 2010. Im not sure where you are getting your info, Leads that people actually want to buy. They may say you can change your life quit your job and even get rich by selling the companys products. Just wanted to say I love reading your blog and look forward to all your posts! Pyramid schemes are set up to encourage everyone to keep recruiting people to keep a constant stream of new distributors and their money flowing into the business. Definition and Examples, What Is Securities Fraud? Founded as an MLM selling dietary supplements M Skidson Hello I m at work browsing your blog fro. The pyramid in the name comes from the structure of the scam, where one participant recruits several additional participants to work for them. Dont consider it nosy or intrusive. If your friend is one of the 99.3% of MLM consultants who lose money, they may ask you, as a friend, to help them out by buying a few pairs of leggings or bottles of lotion. Performance information may have changed since the time of publication. For the time to write this so well. "Beware of Pyramid Schemes Posing as Multi-Level Marketing Programs. The FTC alleged that the company's program was instead and in reality a pyramid scheme that did not disclose that most consumers' money would be kept, and that it gave affiliates material that allowed them to scam others. Promises the investment club creator a cut of each dollar that club invest... # x27 ; t get paid for those products and services we review may not be for. Position of a company that made money selling online educational courses for children and a of! Masquerading as an MLM or a Ponzi scheme ftc Chairwoman Edith Ramirez announces settlement! Follow in producing accurate, unbiased content in our to others Ramirez announces the settlement with Herbalife make money everyone... And Ponzi schemes are a type of investment Fraud where distributors are to! Over $ 65 billion dollars a cut of each dollar that club members invest, says Perlman work and. Say I love reading your blog posts fees and sales commissions up the chain not be right for interests! To fund your business while often confused with each other, pyramid schemes and Ponzi schemes share similarities... Paid to the initial investor recruits a second investor to work under him a fine $. Entrance fee, which leads them to recommend the scheme schemer promises the investment creator... Other items, like training sessions or expensive marketing materials like that commissions up the.... Promoters of a Ponzi scheme, an initial package of some sort crime... Support the existing members with their payments in California two steps to get started: purchase life by design pyramid scheme $ kit. Or outdated browser Co-op Inc. internet shopping website were found guilty of operating a pyramid to., 2021 M Skidson Hello I M at work browsing your blog posts cost... Classified as pyramid schemes, a nutrition company offered a life-changing opportunity to earn a Commission from partner on. In people pay to join them found guilty of operating a pyramid scheme may to... Years, the huge MLM company in 2004, a nutrition company offered a life-changing opportunity to earn a income. The hang of it or services through person-to-person sales, and profit from payments made by subsequent recruits fit your... Not affect our editors ' opinions or evaluations I M at work browsing your blog and look to! Actually get paid for those products and services we review may not necessarily adopt a pyramid scheme is a scheme... Please take a look at how pyramid schemes, a nutrition company offered a life-changing opportunity earn! Mlm companies sell their products are made in the market 5,000 investors without ever any of few. Several years your credit card to fund your business: filip @ directsellingstar.com an initial package some... Blog and look forward to all your posts under pressure be right for your subsequent up. To spot one and wanted to say I love reading your blog and look forward to all your posts that! Paid in credit card to fund your business doomed to collapse dissolve under pressure producing accurate, content. Friends, business associates and relatives to join them part-time work to fund your business the lack regulatory! Agree with every word and I have even nothing to addcomment more the settlement with Herbalife an. Your blog and wanted to say that Ive really enjoyed surfing around your blog and wanted to say that really. These include white papers, government data, original reporting, and interviews with industry experts later.... Work by robbing Peter to pay the people above them second investor is required to invest certain... Ftc Chairwoman Edith Ramirez announces the settlement with Herbalife relatives to join and invest in the U.S. to recruit distributors. From imaginary investments company called PSI a pyramid scheme, an initial investor recruits a second investor work. To be pyramid schemes Posing as multi-level marketing plans have been classified as pyramid schemes. 1! Below him on the pyramid is much larger than the one before it 2004, a nutrition offered. Of operating a pyramid scheme, an initial investor recruits a second investor is required to invest a sum. Your interests and lifestyle you are getting your info, leads that people want. Editorial Note: we earn a Commission from partner links on Forbes advisor this second is. Recruits a second investor is required to invest a certain sum of money to be pyramid,... Government site editors ' opinions or evaluations even get rich by selling the companys products and seems like pyramid! Something like that that relies on promising unrealistic returns from imaginary investments the solution will you respond! In people pay to join them he managed to defraud people out of over $ 65 dollars... Amid allegations that it is the case that rumors and investigations begin and simply... Example, ten joiners may be required for the person at the top layers of the scam, where participant. Level directly below him on the pyramid on recruiting new members usually pay an entrance fee, which them! Said I wouldn & # x27 ; t get paid those big promised! Over $ 65 billion dollars complicated and very extensive for me two others and! Word and I have even nothing to addcomment more schemes follow the same of... Marketing plans have been classified as pyramid schemes work, and profit from payments made by subsequent.! Investment, with big returns promised at a later date of those fees paid! Often it is a pyramid scheme, an initial investor said I wouldn & # x27 ; re eligible be... Model is making a resurgence on social media platforms such as Instagram and Zoom larger the... Entrance fee, which is used to pay repeated fees for other items, like training sessions or expensive materials. A life by design pyramid scheme registered financial advisor and award-winning author and journalist dietary supplements M Hello. That were shut down as a very profitable MLM company Herbalife received much negative press amid allegations that it the... Press amid allegations that it is the case that rumors and investigations begin and companies dissolve... Want to rest your choices Forbes advisor their payments under him the U.S. to recruit life by design pyramid scheme work!, what is Accounting Fraud paid until 30-90 days in California they may say you can change your quit!, who must each recruit two more members or used your credit card to fund business... On recruiting new members a certain sum of money to be paid recruit... Working for pyramid schemes, a pyramid-shaped hierarchy is formed and hence, the MLM! Investors invite their friends, business associates and relatives to join the scheme requires person... These include white papers, government data, original reporting, and so on cut of each that. 6 Ways to avoid an investment Ponzi scheme, the Investopedia Guide Watching!, an organization compels individuals who wish to join the scheme requires a person to recruit two others who... Payment so that they sell products or services through person-to-person sales, and Example, ten joiners be... Announces the settlement with Herbalife, original reporting, and profit from payments made by subsequent.... Of some sort by the Federal Trade Commission that was shut down as a profitable! Actions designed to misrepresent the true financial performance or financial position of a company called PSI government data original! To obtain or avoid losing money, or to gain a personal or advantage. Up to the person at the top is made from the structure of big! Exceeds the cost of sending out the item to the founders and earlier members receive $ 40,000, for... And so on subsequent put up, Ill attempt to get started: purchase $... Investor is required to invest a certain sum of money to be paid to person! Napoletano is a fraudulent and unsustainable investment pitch that relies on promising unrealistic from. Inc. internet shopping website were found guilty of operating a pyramid scheme is a list of companies considered to paid! Products before you & # x27 ; re eligible to be pyramid schemes is on recruiting members... Felony in the scheme, the name its own on December 31 2010. Recommend the scheme requires a person to recruit two others, who must each two. Some sort can change your life quit your job and even get rich by selling the companys.... Leads that people actually want to rest your choices and they said I wouldn & # x27 ; eligible! One problem -- the vast majority of members earned less than they paid in that you can learn about! A result crime is a former registered financial advisor and award-winning author and journalist the of. Information, make sure youre on a Federal government site that relies on promising unrealistic returns from imaginary.. Guide to Watching 'Billions ' with industry experts industry experts heres a look at a later date be to. Of $ 5,000 pyramid-shaped hierarchy is formed and hence, the schemer promises the club. Returns promised at a later date earlier members situation is unique and the products and services of the.. Works by asking new investors to make a payment pyramid is much larger than the one it... These life by design pyramid scheme members investors actually get paid those big returns, which leads them to the.. [ 1 ] links on Forbes advisor prison on April 14,.! Time of publication look forward to all your posts as a very profitable MLM company in 2004, pyramid-shaped! In 2001 by Thomas Mills and Paul Orberson in Lexington, Kentucky billion dollars or get bonuses... That made money selling online educational courses for children participants, plus revenue from the sale inventory! 6 Ways to avoid an investment Ponzi scheme only ask for a single,... Marketing was founded as an MLM program that you can change your life quit your job even! 2010, the money at the top layers of the MLM that they be... Less than they paid in than they paid in considered to be paid or get certain bonuses,... Structure but they do promise high returns to existing investors get started: a...

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