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Renaissance The Tax People has enjoyed prosperity nationwide, but critics of the company say its growth is the result of a highly organized pyramid scheme. And its promise of saving customers money on their taxes has generated numerous complaints with regulatory agencies.
Renaissance has grown from about 2,000 clients nationwide in November 1998 to more than 40,000 through a base of loyal marketing associates. Associates receive a 10 percent commission for selling the company's Tax Relief System to other customers and get a 1 percent commission of these new associates' sales. Sales in the company have grown 1,200 percent in two years and the company plans to have annualized revenues of $100 million by year's end.
The company has 18 outstanding complaints with Kansas Attorney General Carla Stovall's Office and another 19 complaints on record with the Better Business Bureau of Northeast Kansas. The AG's office also has eight open complaints against Advantage International Marketing, a former name of Renaissance. The company isn't a defendant in any Shawnee County District Court cases.
Consumers have complained that the money they paid for Renaissance's tax services wasn't refunded when they were dissatisfied with the services.
Renaissance's policy on refunds guarantees clients will save an additional $5,000 in legal deductions by applying the business principles in the company's Tax Relief System to their home-based business or the company will refund their initial payment of $300 for access to the TTP Tax Relief System.
Michael Cooper, president and chief executive officer of Renaissance, said the company gives customers a month to complain after paying the $300 fee if they want a refund. Any flat fees paid after that are much like a person's utility bills. Once the money is paid, it's gone.
Greg Joens, of Topeka, joined the company in November 1999 and paid the initial fee of $300 for access to the Tax Relief System. After three months with the company of paying a $100 flat fee every month, he decided he didn't like the ideas contained in the Tax Relief System, which involve hiring family members as part of a Tax People home-based business and writing off many home expenditures as business expenditures.
He said the tax expert supplied by Renaissance to look over his taxes for three previous years didn't find anything additional to deduct. Joens asked for the paperwork the expert looked through to decide this and wasn't given a response.
In February, Joens talked to the Renaissance representative who introduced him to the company and said he wanted out and wanted his $600 back. The representative said he would talk to the main office about it, but Joens never heard back. He faxed letters to the office asking for a refund and, when he didn't get a response, called the AG's office to complain.
"I decided I wasn't going to try to sell the product to others before I figured out if it would work," Joens said. "When I complained, they never contacted me, even though I left my phone number on the faxes. It was a matter of ethics for me. You're looking for tax loopholes that it doesn't seem to me that you deserve things like paying your kids to do work supposedly for the company it just didn't work for me."
Cooper said Joens should have received a letter of cancellation from Renaissance automatically after faxing the letter when his service was canceled. He said that Joens' request for a refund is unreasonable because that goes against the refund policy.
"We give people 30 days after paying that initial fee to look over the materials and decide whether this is right for them," Cooper said. "As an example, let's say this man joins Nextel, signs a contract for a cellular phone for two years, buys a $300 phone and pays $129 per month for the use of it. If three months later he decides to cancel, he wouldn't get a refund. In fact, he'd be forced in court probably to pay the remainder of the contract.
"The only contract you sign with us is one that says you have looked over our policies and procedures and understand them. No business could survive if you did those kind of refunds. You need to talk to people and make sure you are willing to do this before you get involved. Once you pay past the refund period, that money is paid on your behalf. It's gone."
Joens said he doesn't doubt the system works for some people.
"I wish I had researched it a bit more," Joens said. "I know the system works for the guy that brought me in, but I'm the type of person who wants to look at a product and see if it works. How can I refer it to other people if I don't know about it myself? They make claims that you can get $5,000 in tax claims per year, and that's a pretty bold claim. After I researched it, I just thought, 'No, I can't sell this to people.' "
Cooper defended the system, saying that, for it to work, participants must show an intent to make the home-based Tax People business work.
"All of these deductions are not only approved by Congress, they're certified by tax law," Cooper said. "The system is approved in all 50 states as continuing education credit for CPAs. The government doesn't decide if these deductions work. You do with your intent to make this work. If you follow our business plan, you're not only bulletproof for these deductions it will generate a profit. I have two adult children, my brother, father and several other family members working for me here. Is there any problem with that?"
According to Linda Woodard, president of the Better Business Bureau of Northeast Kansas, the company has an unsatisfactory record in its BBB reliability report. The report states the unsatisfactory record is "due to a pattern of complaints generally concerning refund procedures and problems from not resolving complaints within a timely manner." The report also states that Renaissance has declined to offer any information about itself to the BBB, which is an allegation that Cooper denies.
"The Better Business Bureau, to the best of my knowledge, has never contacted us or forwarded a single complaint to us or asked for any information about us," Cooper said. "I have called personally and several of my fellow executives have called personally and asked the BBB if there were any questions or information needed about us. They haven't said anything."
Mary Tritsch, spokeswoman for the AG's office, said the company and the complaints against it are currently under investigation with the Attorney General's office. She said most of the complaints on record with the AG about Renaissance are from customers who paid Renaissance money and didn't like what they got in return. When they asked for the guaranteed refund, they didn't get it.
Cooper doesn't shy away from the fact that Renaissance has outstanding complaints against it. In fact, he volunteers the information. He said any business that has enjoyed the growth that Renaissance has experienced will generate complaints.
"We add about 2,000 clients every month and refund several hundred every month," Cooper said. "We have 43,000 satisfied clients. We also have not only the highest sales rating in the industry, but the highest by tenfold. We have kept 72 percent of our customers over a three-year period when other companies are lucky to keep 10 or 12 percent. I'm not in any way belittling those complaints. We don't want a single unsatisfied customer. The only refund request we ever deny is an unreasonable one."
Cooper said a majority of the complaints may be the handiwork of disgruntled former Renaissance employees.
"We're actively trying to resolve even those complaints," Cooper said.
The AG's office has a form letter concerning Renaissance, The Tax Relief System and Advantage International Marketing, which is another company in which Cooper is a principal, that it sends to people who request information from the Attorney General about those parties under the Kansas Open Records Act.
The form letter mentions the possibility that Renaissance may be a "pyramid promotional scheme," which is a level nine felony in Kansas. A pyramid promotional scheme is defined as "any plan or operation by which a participant gives consideration for the opportunity to receive compensation which is derived primarily from any person's introduction of other persons into participation in the plan or operation rather than from the sale of goods, services or intangible property by the participant or other persons introduced into the plan or operation."
"We're not saying it is a pyramid scheme," Tritsch said. "We're saying it could be and it looks like one."
Cooper said that statement is much like saying murder is a felony. He said neither statement has anything to do with his company.
"The fact that this business is in network marketing doesn't make it a pyramid scheme," Cooper said. "It's not a situation where you're selling gold contracts to people, and when you can get your friends to buy these contracts, then we give you free gold. There have been many semi-disguised pyramid schemes like that.
"If you're like us and selling a product to the public that they want or are buying and you're paying somebody a salary or commission to distribute those services, then you're a distributor. If you're selling an investment scheme where you get paid for headhunting and getting people to put money in, then that's a pyramid scheme."
Cooper said all businesses are pyramids where the public is the base and the head of the company is at the top. He compares Renaissance to Amway or State Farm Insurance in that they are selling a product of tax advice and audit protection to people regardless of whether they draw anyone else into the company.
"It would be different if all our customers were associates of our company," Cooper said. "A majority of our customers aren't representatives of Renaissance. We also have thousands of representatives who aren't customers. The main thing that makes the AG's office suspicious of us is the fact that many companies have done pyramid schemes using a multi-level structure like this."
The AG's form letter also states that the AG hasn't received any consumer complaints specifically naming Cooper, but that Cooper was a defendant in a case filed in the mid-1990s by Stovall against Truly Special Inc., a former Topeka direct sales company that Cooper took over in 1994.
Truly Special was the direct sales division of Briarwood Farms, which used to sell jams, jellies and other Kansas-made products locally. The case involved what Stovall termed a violation of the Kansas Consumer Protection Act by Truly Special. A consent agreement was signed in April 1996 by Cooper and Truly Special regarding the program in question and Cooper terminated the program.
The letter also mentions a later run-in Cooper had with the Kansas Securities Commissioner's office in December 1998 when he signed a consent agreement to pay a $10,000 fine for giving away 1,100 shares of the ownership of Renaissance for free.
"The basic story is that they fined me because when I gave away the stock it wasn't done exactly right according to their standards," Cooper said. "I got very good legal advice that it was all right. At the time, the business had entire sales of a few hundred thousand dollars. We had 500 clients. It was the most selfless thing I've done and I was fined $10,000."
The AG form letter regarding Cooper and Renaissance also states that the AG's records have no closed complaints against The Tax People or The Tax Relief System, 11 closed complaints about Advantage International Marketing and four closed complaints about Renaissance. Cooper says he knows of dozens of closed complaints.
"It seems that we respond every month to at least one from the AG's office," Cooper said. "In most cases, we have a file full of closed complaints. Most of the time, we refund the request even if it's unreasonable."
Cooper said that, despite his experiences with the Better Business Bureau and the AG's office, he is glad those agencies are here to act as watchdogs for consumers. But, he said, Renaissance can't respond to complaints if they aren't forwarded on to the company.
"I commend them for watching out for the consumer, because that's their job," Cooper said. "I'm glad they're here. We need somebody to regulate and keep the network marketing industry cleaned up. People are going into people's homes selling things and somebody needs to make sure they aren't using any high-pressure techniques or anything like that."
"I wouldn't have any complaints if it were my choice," Cooper said. "I don't need 200 unhappy customers. If any complaint comes across our desks, we'll give 100 percent due diligence to resolving it, but we can't resolve it if those agencies hold them in their files or don't forward them to us."
Cooper said the distinction between Renaissance and a pyramid scheme is clear-cut.
"It's a black-and-white distinction," Cooper said. "We have assistant attorney generals and plenty of other law enforcement, state and federal government and regulating agency employees that are sales reps with us. We even have IRS employees. The AG's office will always warn the public what might be a pyramid scheme, but it's up to the consumer to decide about us. The AG's office and BBB don't know what our tax advice is and how good it is. In all, 99.99 percent of our customers are satisfied."
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