If you were aware of MLM news in the early to mid 1970’s, I am sure you heard multiple stories about a company called Holiday Magic.
In today’s post, I am going to examine and review a now defunct multi level marketing company called Holiday Magic.
I will tell you some of the history behind Holiday Magic, what types of products they carried, other businesses launched as a result of Holiday Magic and why Holiday Magic is not an active company now.
There are many lessons in this post for both independent MLM representatives, and also those who own MLM companies.
So scroll down and learn more about Holiday Magic.
The Start of Holiday Magic
William Penn Patrick had tried several business ideas and he had failures.
And then, he was selling products door to door in San Rafael, California and smelled a wonderful fragrance coming from a garage.
The garage was a company that was going out of business and selling their cosmetics that had an amazing fruit fragrance.
Patrick’s business sense began spinning, and he bought the complete supply for just over $16,000.
Patrick used the cosmetics he purchased to start Holiday Magic.
Using the multi level marketing system, Patrick essentially sold opportunities to others who would be independent representatives and would make commissions selling the products, and for bringing in other representatives which would be their down-line.
During the time of start up, the Federal government really did not have any guidelines or regulations on multi level marketing companies.
Holiday Magic Products and Opportunity
Penn Patrick found some great people to jump into his Holiday Magic opportunity.
Many people loved the products.
Not only did people want to purchase the products, but they also wanted to join the business because if people such as Zig Ziglar and Glen Turner were doing so great with Holiday Magic, they surely could too.
Individuals were “buying in” with the opportunity to make their riches selling the Holiday cosmetics and home-care cleaning products.
William Penn Patrick taught a ruthless approach to doing the business.
It seemed high pressure and attacking other companies did work at that juncture in time, but people have learned that is not the system to use now.
Holiday Magic Training
Patrick discovered another way to make money and also train the Holiday Magic distributors.
In 1967, Patrick wrote a book that was titled “Happiness and Success through Principle”.
After doing so, he developed a training institute and company called Leadership Dynamics.
Leadership Dynamics was separate from Holiday Magic, but representatives were encouraged to pay the $1,000 and take the course.
Also, those who held top positions with Holiday Magic were required to take the course.
In 1968, Alexander Everett founded Mind Dynamics.
The principles behind Mind Dynamics was mind control and self-hypnosis.
William Penn Patrick saw Mind Dynamics as a perfect follow up to Leadership Dynamics, and he purchased Mind Dynamics in 1970.
The slogan of Mind Dynamics was: “We’ll do anything to help you be a better manager, even hurt you.”
Many Holiday Magic distributors paid to take this course.
Patrick found that the courses he was offering were bringing in huge buckets of money, and he started a 3rd course called Sales Dynamics, but at this point, the government was looking hard at the Holiday Magic empire.
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California and Avon
Patrick was a well known personality in California.
He actually ran for Governor and used his ruthless approach to attempt to beat Ronald Reagan, which we all know he didn’t win.
Many believe that this attack in politics may have caused more attention to be focused on his businesses.
In 1972, California sued Holiday Magic for unfair business practices, and the lawsuits began to roll in.
Avon sued Holiday Magic in early 1973 for passing out fliers claiming Avon was paying off the District Attorney’s office.
The ruthlessness Patrick used was coming back upon him. In mid 1973, the U.S. Securities and Exchange Commission also filed a lawsuit against Holiday Magic saying they had scammed around 80,000 people with the cosmetics and other products.
In addition, the Federal Trade Commission jumped in and found Holiday Magic guilty of deceptive trading. Sweden also fined the company.
The Private Plane
Patrick was always pushing the limits.
He did spend some time in the military and had a pilot license.
With more money than he could possibly spend, he bought a P51 Mustang, which by all rights, was illegal for a private citizen to own.
But, somehow Patrick bypassed regulations to keep and fly it.
Some believe it was a set-up, but who really knows?
In June of 1973, Patrick was flying the plane performing stunts and he crashed and died.
Without Patrick’s skilled ferocious battling techniques, Holiday Magic was going to get chopped down.
Termed a Pyramid Scam
The United States Senate held hearings that had Holiday Magic at the forefront and was about pyramid scams.
All in all, the U.S. Government determined that Holiday Magic was a pyramid scam, and the courses that were provided (Leadership Dynamics, Mind Dynamics and Sales Dynamics) were all a part of this scam.
Now if you speak with some other people, there is a huge disagreement with the position the Government took.
To some degree, every single business that operates is a pyramid.
There are manufacturers, middlemen and retailers with each member getting “a piece of the pie.”
Why are they not illegal?
It all comes down to a simple approach…If high members in the pyramid can attain great success at the expense of the bottom pyramid members, it could be illegal.
Also, if the approach is to sell the business opportunity to sell the business opportunity and again, to sell the business opportunity, with the products or services taking a back seat, it is probably an illegal pyramid.
Holiday Magic Helps Teach Law Students
The Holiday Magic case is used to train and teach law students in criminal justice about scams at corporate levels.
Some of the people who were involved with Holiday Magic went on to graduate from Federal Penitentiaries.
I mentioned Glen Turner earlier, and he left Holiday Magic to start his own MLM called Koscot which used many of the same Holiday Magic principles.
He managed to get investigated for mail fraud and operating a Pyramid scam.
He spent nearly 5 years in prison.
Roland Nocera who was the President and CEO of Holiday Magic was found guilty of securities fraud on a different incident.
Larry Huff spent 2 years in prison for operating a Ponzi scheme that was unrelated to Holiday Magic.
So What Can We Learn?
The product or service should always come first and building a down-line second.
Charging for training can be a no-no, and something else Holiday Magic was allowing was representatives setting whatever price they wanted to on retail products.
So, one rep is getting 20% commission on a bar of soap, while another is getting 50%.
Consumers begin to compare, and they see the variances.
I suggest you subscribe to this website so you can stay abreast of the proper methods of operating your MLM business.
You can do so on the right side of this page.
Do not fall into a trap that could land you in Federal prison, and do know that if you use the Golden Rule in your MLM business, you should do just fine.
Zig Ziglar had a Holiday Magic business for awhile.
He never went to prison, and he is a well respected personality.
It is how you do the business.
Don’t be ruthless and hating, be educative and friendly, and good things will come to you.
“The foundation stones for a balanced success are honesty, character, integrity, faith, love and loyalty.” Zig Ziglar
In 1974, Holiday Magic, along with all the courses were shut down completely.
So what do you have to say about the Holiday Magic system?
Do you agree that it was a Pyramid scam, or do you believe the Federal government over-stepped their bounds?
I am adding some reference links where you can read further about the downfall of Holiday Magic.
Please share your comments and questions in the comments section at the end of this post.
- Holiday Magic on Wikipedia
- Multi-Level Marketing or Pyramid Scheme?
- William Penn Patrick on Wikipedia
- MLM Legal Cases
- Cult Education Institute
About the Author
Greg Boudonck is a freelance writer and the author of over 50 books. He writes on many different topics, but business subjects are one of his primary areas of writing expertise. You can see more about Greg and his work by visiting his website at Lancerlife.com.