Holiday Magic was a multi-level marketing organization, founded in 1964, by William Penn Patrick (1930–1973) in the United States. Originally the organization distributed goods such as home-care products and cosmetics. Company distributors were encouraged to recruit other distributors in a multilevel marketing structure, which was later characterized as a

pyramid scheme 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. As recruiting multiplies, recruiting becomes quickly im ...

. On May 16, 1974, a compromise settlement with approximately 31,000 class members, establishing a trust fund worth $2,600,381, was approved by the court. The organization was dissolved in 1974, subsequent to the death of Patrick in 1973. The company had been investigated by the Market Court of

Sweden Sweden, formally the Kingdom of Sweden,The United Nations Group of Experts on Geographical Names states that the country's formal name is the Kingdom of SwedenUNGEGN World Geographical Names, Sweden./ref> is a Nordic country located on ...

United States Securities and Exchange Commission The U.S. Securities and Exchange Commission (SEC) is an independent agency of the United States federal government, created in the aftermath of the Wall Street Crash of 1929. The primary purpose of the SEC is to enforce the law against market ...

, the

Federal Trade Commission The Federal Trade Commission (FTC) is an independent agency of the United States government whose principal mission is the enforcement of civil (non-criminal) antitrust law and the promotion of consumer protection. The FTC shares jurisdiction ov ...

, and the

State of California California is a U.S. state, state in the Western United States, located along the West Coast of the United States, Pacific Coast. With nearly 39.2million residents across a total area of approximately , it is the List of states and territori ...

Organization

Origins

In 1964, after a bankruptcy and several business failures, Patrick (age 33) was walking by a garage in

San Rafael, California San Rafael ( ; Spanish language, Spanish for "Raphael (archangel), St. Raphael", ) is a city and the county seat of Marin County, California, Marin County, California, United States. The city is located in the North Bay (San Francisco Bay Area), ...

, and noted that fruit-scented cosmetics were being sold. The company called Zolene was about to go out of business. Patrick bought all of the cosmetics supplies for $16,250, and founded Holiday Magic, Inc. After the purchase, Patrick began selling distributorships in his new company. Patrick, a student of Alexander Everett (founder of

Mind Dynamics Mind Dynamics was a seminar company, founded by Alexander Everett in Texas in 1968. The company ceased operating in December 1973 after the death of co-owner William Penn Patrick and the resignation of President Robert White, alongside investiga ...

), used Mind Dynamics techniques as well as the Silva Method in the Holiday Magic organization.

Legal problems

The State of California filed suit against Holiday Magic in December 1972. In February 1973, Holiday Magic was sued for calumny by

Avon Products Avon Products, Inc. or simply known as Avon, is an American-British multinational cosmetics, skin care, fragrance and personal care company, based in London. It sells directly to the public. Avon had annual sales of $9.1 billion worldwide in 2 ...

. In the lawsuit, Avon Products' claimed that "Holiday Magic employees distributed leaflets accusing Avon of goon squads, paying off The District attorney's office." In June 1973, the

filed a lawsuit against Holiday Magic, charging

Patrick Patrick may refer to: * Patrick (given name), list of people and fictional characters with this name * Patrick (surname), list of people with this name People * Saint Patrick (c. 385–c. 461), Christian saint *Gilla Pátraic (died 1084), Patrick ...

with "bilking some 80,000 people out of more than $250 million through his Holiday Magic cosmetics and soap empire". The company was investigated by the

,"The Role of Small Business in Franchising, Hearings Before the Subcommittee on Minority Small Business", United States Congress. United States House of Representatives. House Permanent Select Committee on Small Business., 1973, P. 127, 137, 157, 203. and in June 1973 the company was found guilty of deceptive trade practices.
William Penn Patrick, a former mentor of Turner's, was charged last month by the Securities and Exchange Commission with bilking some 80,000 people out of more than $250 million through his Holiday Magic cosmetics and soap empire. The FTC found that Holiday Magic was in violation of section 5 of the

Federal Trade Commission Act The Federal Trade Commission Act of 1914 was a United States federal law which established the Federal Trade Commission. The Act was signed into law by US President Woodrow Wilson in 1914 and outlaws unfair methods of competition and unfair acts ...

, and section 2 (a) of the Clayton Antitrust Act. In 1973, Holiday Magic's proceedings were prohibited by the Market Court of Sweden, and a fine of 2 million Swedish kronor was imposed.Micklitz, Monazzahian, and Robler
Door to Door Selling, Pyramid Selling, Multilevel Marketing
, CONTRACT NO. A0/7050/98/000156, A STUDY COMMISSIONED BY THE EUROPEAN COMMISSION, VOLUME II: ANALYSIS. November 1999.; Pages 196, 205, 209, 214, 215, 233.

Pyramid scheme

The company was termed as part of the "big three" scams, in a 1974 United States Senate hearing before the Consumers of the Committee on Commerce that dealt with pyramid sales. 1974 hearings before the Congressional Oversight panel of the Federal Trade Commission described Holiday Magic as a "Multi-level marketer of cosmetics", that used an "unfair and deceptive pyramid distribution scheme". Holiday Magic was also labeled a "pyramid scheme" and a "multi-level distributorship" by the United States Bureau of Domestic Commerce, in their 1976 published book: ''Crimes Against Business: A Management Perspective''. The company was cited by the United States House of Representatives in a 1975 hearing as an example of consumer fraud, again in 1977,"Summary of Testimony and Findings and Conclusions Resulting from Hearings in New York on Drug Law", United States Congress, Select Committee on Narcotics Abuse and Control, 1977, P.53. and in 1991, in a hearing by the House Committee on Small Business. Katz's ''Everybody's Business: An Almanac'' also referred to Holiday Magic as a "pyramid sales organization". Turner described it as one of the first "pyramid marketing" companies in America. Clarke referred to the company as an "illegitimate" business. Tobias poked fun at the pyramid nature of the organization, in his book ''The Only Investment Guide You'll Ever Need'', telling readers to be wary of "Holiday Magic - where the big money to be made was not in selling cosmetics, but in selling franchises to sell franchises (to sell franchises)" Howe wrote in the ''

San Francisco Chronicle The ''San Francisco Chronicle'' is a newspaper serving primarily the San Francisco Bay Area of Northern California. It was founded in 1865 as ''The Daily Dramatic Chronicle'' by teenage brothers Charles de Young and M. H. de Young, Michael H. de ...

'' that Holiday Magic was "one of the largest of all pyramid schemes". Holiday Magic is used as an example in graduate level criminal justice coursework to analyze the nature of corporate scams. According to the ''Duke Law Journal'': "Illegality permeated every facet of the promotion of the Holiday Magic marketing program." One of the Holiday Magic Inc. cases was also cited by ''The University of Chicago Law Review'' and the ''Columbia Law Review''. The Office of the State Attorney General in Maine, United States cites ''In re Holiday Magic, Inc., 84 F.T.C. 748'' as an example of

s. Faltinsky described Holiday Magic as "the largest pyramid scam of all time".

Related companies

Leadership Dynamics

In 1967, William Penn Patrick wrote a booklet, entitled ''Happiness and Success through Principle'', and founded

Leadership Dynamics Leadership Dynamics, also known as Leadership Dynamics Institute (LDI), was a private, for-profit company, owned by William Penn Patrick. The company focused on executive training, personal development and self-improvement. Leadership Dynamics ...

based on those principles. Holiday Magic distributors were invited, though not required, to attend the Leadership Dynamics Institute self-improvement sessions at a cost of $1000 each. Those in the positions of instructor general, trainer general, and senior general were required to take the training. Navarro described the training as having "overtones of strict military training techniques. Ben Gay, a high-level instructor at Leadership Dynamics, was president of Holiday Magic in the United States. Though he claimed Leadership Dynamics was a separate company, "in no way related to Holiday Magic, Inc.", Gene Church pointed out many inconsistencies in this statement, in his book '' The Pit: A Group Encounter Defiled''.

Mind Dynamics

William Penn Patrick bought

in 1970.
Page. 54. :
"Mind Dynamics, founded by Alexander Everett, was the major forerunner of large group awareness trainings. Although Mind Dynamics was only in existence for a few years, it sparked an entire industry of similar trainings." The Mind Dynamics course was described as providing "a means of achieving personal success through the conscious use of the subconscious mind". Distributors for Holiday Magic, who took the course, have considered it as a Holiday Magic Business expense.

Sales Dynamics

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

Ceased operations

In 1974, after almost 10 years in operation and tied to pyramid schemes and controversy, both Leadership Dynamics and Mind Dynamics ceased operations.

Later information

CEO A chief executive officer (CEO), also known as a central executive officer (CEO), chief administrator officer (CAO) or just chief executive (CE), is one of a number of corporate executives charged with the management of an organization especially ...

and President Roland R. Nocera pleaded guilty to

securities fraud Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in los ...

, in the case ''United States v. Nocera, et al.'' (unrelated to Holiday Magic). Larry Stephen Huff, another key individual in the company, served two years in a Federal Prison, for charges related to a Ponzi scam (unrelated to Holiday Magic).
"As far back as 1973, Huff helped start one of the largest of all pyramid schemes, a cosmetics marketing business called Holiday Magic, which defrauded investors of $250 million, according to the Securities and Exchange Commission." Abe F. March held several executive positions for Holiday Magic and parent company U.S. Universal; Regional Vice President, Canada (1971–1972), Vice President, Greece (1972–1973) and Managing Director for Sta-Power, Germany (1973). He subsequently bought exclusive rights for Middle East distribution of Holiday Magic cosmetics and formed his own company, Beauty Magic, in Beirut, Lebanon. In 2006 he published a book (''To Beirut and Back - An American in the Middle East'') dealing, in part, with his experiences. Glenn W. Turner worked briefly for Holiday Magic in 1966. He then started two multi-level marketing companies, Koscot Interplanetary, selling cosmetics, and Dare to Be Great, selling motivational and self-improvement courses.In Re Koscot Interplanetary Inc., 86 F.T.C. 11106 (1975)
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