0:00

Hey, it's Jane Marie. We're releasing

0:02

four bonus episodes from season one for

0:04

the next couple of weeks. They're about

0:06

MLMs again, some of your faves,

0:09

The Ugly Banana Leggings Company for

0:11

one, and another one that's sort

0:13

of like a cult. If you want to unlock

0:16

all of the bonus episodes right now, you

0:18

can go to Stitcher Premium dot com and sign

0:21

up for a free trial with the code Dream.

0:24

You'll get access to all four bonus episodes

0:26

today and a free month of listening

0:28

without ads in Stitcher, and you'll also

0:30

be supporting our show. That's Stitcher

0:33

Premium dot com and sign up with

0:35

the code Dream to listen to everything

0:37

today. Otherwise, yeah,

0:39

gotta wait over the next four weeks. Thanks.

0:43

Right after we wrapped production on Season one

0:45

of The Dream, a scandal happened in the MLM

0:48

world involving a company I jokingly

0:50

refer to as the Ugly Banana Leggings

0:52

Company, Lula Row. Lula

0:54

Row is an MLM, a huge one based

0:57

out of Utah. They carry more than banana

0:59

print leggings, are also dresses and shirts,

1:02

all kinds of what they call buttery soft

1:04

knitwear, and a variety of prints, and

1:06

all the styles have names like

1:09

actual human names like Debbie

1:11

and Jill and Irma.

1:14

So this MLM. They got into

1:16

trouble last year for not paying one of their vendors

1:18

and ended up in court. They've actually

1:20

ended up in a bunch of courts for a bunch

1:22

of reasons. I was doing all

1:24

kinds of other reporting at the time and didn't follow the

1:26

case super closely, so we found someone

1:29

who did. I am Haley Peterson.

1:31

I'm a senior correspondent for Business Insider.

1:34

I mostly cover retail companies,

1:36

and I cover both large and small

1:38

private public includes Walmart,

1:41

Amazon, Whole Foods, Kroger,

1:44

really anything that people buy I

1:47

write about, including Lula

1:50

row Lularo

1:55

popped onto my radar several years ago.

1:58

I think it was like three or four years ago when

2:00

I heard about these online

2:03

parties where mostly women

2:06

were buying up leggings

2:08

really quickly. They would go up for sale and

2:11

they'd be gone in a matter of minutes. Hey,

2:13

welcome, so much for joining. We're gonna do Sarah's

2:16

right now. They are seventy dollars. They

2:18

are true to size, if there's if it's has a

2:20

lot of stretch, go down one size if

2:23

you have any questions. So they will have

2:25

a Facebook live party where

2:28

they will invite all of their shoppers. They have

2:30

these massive shopper groups that they have

2:33

thousands sometimes thousands of members in them,

2:35

and they'll go live on Facebook

2:37

and sell items almost like an auction,

2:40

and they will hold up sometimes will unboxed

2:42

items in real time. This is a Jacard

2:44

fabric. It's gorgeous. It's a cream

2:47

with a dark blue, there's yellow and

2:49

there's red in there. Look at that print is

2:52

so pretty. Then

2:54

they'll say whoever comments first,

2:57

that it's sold, It goes to

2:59

that person. And people were just dying

3:01

to get particular patterns. Does that

3:03

make sense to you, I know, it seems probably very

3:05

complicated. It

3:07

does. What doesn't make sense to me is

3:10

that I've seen these clothes and

3:14

they and they look like almost

3:18

all of them look really

3:20

similar to the four dollars ninety nine cent

3:22

dresses that I buy for my five year old

3:24

at H and M. And do you know the ones?

3:27

Yeah, And there's even Walmart's

3:30

been coming out with a lot of really colorful leggings

3:32

lately. There's a lot of food patterns,

3:36

a lot of cultural appropriation prints.

3:38

Right. I spoke to someone once,

3:40

a consultant. I can't remember where she

3:42

was, but she was somewhere on the I think she maybe

3:45

it was Chicago or something in the

3:47

middle of the winter. She got a Aztec

3:49

prints in her box. It was just a

3:51

box full of Aztech princes and she said, there's

3:53

no way I'm going to sell this in

3:55

the middle of the winter in

3:58

Chicago.

4:04

I will explain quickly, when you're a consultant

4:06

for Lula Rowe, you don't actually get to pick

4:08

the inventory that you sell. You pick the

4:10

styles, what you

4:13

picked the silhouette, but you can't

4:15

actually pick the patterns, the colors, anything

4:18

like that. So that is all site unseen. So

4:20

you're buying a box of essentially

4:22

unknown items. And

4:25

that box was five thousand dollars.

4:28

That's right. The initial buy in to become a

4:30

Lula Roe seller was five grand

4:32

in the beginning. It's apparently only

4:35

twenty five hundred now. When the

4:37

company first came out, people were really excited

4:39

about it. They really appealed to people

4:42

who worked from home or stay

4:45

at home moms that wanted something

4:47

that was going to be forgiving to

4:49

where that was comfortable so Haley

4:52

started looking into this company selling five thousand

4:54

dollars mystery boxes full of leggings, and

4:57

what she found is surprising if

4:59

you've never heard our show. But four the people

5:01

that have done really really well with Lularo,

5:03

which are a very small percentage, have

5:06

made a lot of money, some people making

5:09

bonus checks since

5:11

then of upwards of ninety

5:13

thousand dollars a month. If

5:19

you take a look at the numbers, the company had about

5:21

two thousand consultants in late twenty fifteen.

5:24

That jumped to about thirty thousand about

5:26

a year later, and then within six

5:29

months the company had doubled the number

5:31

of consultants to more than seventy seven thousand

5:33

people. And they're all buying in for five

5:35

thousand. That makes

5:38

the first two thousand very

5:40

exactly. Those people who got in in twenty

5:42

fifteen early twenty sixteen

5:44

are the ones who were really successful.

5:47

And I can almost predict the story

5:50

that I'm going to hear once somebody

5:52

tells me what year they got into

5:54

lu lar Ro, Like you can

5:56

say, okay, twenty seventeen, here's what

5:58

happened exactly twenty eighteen. Rod

6:01

Yes, after interview, after

6:03

interview, after interview. It's been that theme

6:05

has emerged over and over and over again. Where

6:08

did things start going really wrong?

6:11

That would be around twenty seventeen.

6:14

I would say that's also interestingly

6:17

when the company experienced its biggest jump

6:19

in growth. When

6:22

the massive growth happened, there

6:25

was a bit of a production

6:28

change, and that's when a

6:30

lot of complaints started popping up

6:32

about quality of the clothes

6:34

that we're coming out of Lular row. There's

6:36

even a hashtag you can look at on Instagram

6:39

called Lulu rou fail, where

6:41

people post pictures of clothing that's arrived with

6:43

holes in it. They also post photos

6:45

of the front of pants where the print

6:48

makes it look like you have a huge boner. Some

6:50

of those complaints were coming from customers, and some

6:53

of them were coming from consultants saying they couldn't

6:55

sell what they were getting in their boxes. Consultants

6:57

were also complaining that they weren't getting

7:00

their full order, so they would order

7:02

sixty items and get twenty

7:05

items and the rest. There would

7:07

be back order slips or sometimes no slips

7:09

at all in their boxes, saying you

7:12

know, we'll send these to you at a later date,

7:14

or hear some back what they would call back

7:16

office credit for these items. Essentially,

7:20

the factory at the time couldn't keep up the quantity

7:22

or quality of the clothing that was in such high demand.

7:25

And according to Haley, at the beginning, at least

7:27

that demand appeared to be real, like there

7:30

were real end consumers, women

7:32

who wanted stretchy leggings and dresses

7:34

and wild prints for slightly above

7:36

what you might pay for the same thing at target. But

7:38

then another problem started happening. In

7:41

addition to patterns being out of season and

7:43

the dip in quality and the back order issue,

7:46

sometimes boxes contained way too many

7:48

of the same exact item. Obviously,

7:51

all of this made it difficult for consultants

7:53

to assemble decent collections to sell to their

7:55

followers. So they had to get creative,

7:58

and they started doing something that may have been the

8:00

biggest turning point of all. They began

8:02

selling to each other, moving

8:04

inventory around the country. Unbeknownst to

8:06

Lula Roux and Lularo's profits began falling

8:08

even faster. Still, You've got

8:11

money from new recruits and old going out to lular

8:13

Row and screwed up orders of crappy banana

8:15

leggings coming back to sellers and

8:17

then, of course, in true MLM fashion, rather

8:20

than fix those problems right away, Lula

8:22

Row does a misdirect. They

8:25

decide to implement a buyback program,

8:27

which they were actually required to have by law

8:29

in the first place, to entice even

8:32

more new sellers. And

8:34

I think at the time, it was meant to be

8:37

sort of a here's a risk

8:39

free way to get into Lula Row, because

8:42

if it doesn't work out for you, we'll buy back

8:44

all of your inventory, one hundred percent

8:46

of it and there's no risk. What

8:49

ended up happening is a lot of consultants

8:51

used that as an opportunity to get out of

8:53

the business and sell back their own sold inventory.

8:56

Suddenly, Lula Row had

8:58

an influx of unsold

9:01

clothes coming back to their warehouse and

9:04

growing number of refunds that were

9:07

owed to consultants, and these were in

9:09

amounts of five thousand

9:11

upwards of twenty five thousand,

9:13

according to consultants that I've spoken to. And

9:17

that was also around the same time that the company

9:20

changed its compensation structure so

9:22

that bonuses were no longer based on

9:24

what their teams were buying wholesale from

9:26

Lularo. It made it so that

9:28

the compensation for them was based on

9:30

what their teams were actually selling to customers,

9:34

and that resulted in reportedly

9:38

sales loss for a lot of

9:41

or revenue losses for a lot of top leaders

9:43

within the company. And so suddenly it was not as lucrative

9:45

of a job. What do you know, when

9:47

the company decided to function slightly more like

9:49

a normal business and follow the rules that

9:51

the government says must be adhered to in all

9:54

MLMs, the thing falls apart.

10:06

So you have a kind of a perfect storm

10:09

of things going wrong at this company. One

10:12

of the things you said about sending everything back

10:14

and then were they paying, I've

10:17

no, that is the short answer. In

10:21

some cases, yes, I think that

10:24

that may have happened. But I spoke

10:26

to a lot of consultants who

10:28

complained that they were waiting

10:30

months, sometimes over a year to get their

10:32

refund checks for the inventory they sent back

10:34

to Lulu Rou, and sometimes

10:37

the checks that they were getting were

10:39

not the in the amounts that they expected.

10:42

Luurou had a lot of rules about

10:45

what kinds of inventory they would accept back. That

10:47

that some consultants have referred to as lula math

10:50

and people. Some

10:52

people were really struggling financially

10:55

while waiting for these checks. You know that we're worth

10:57

five thousand dollars or more. And

11:01

I will say, however, that I've heard anecdotally

11:03

over the past several months that Luluro

11:06

has been sending checks out. I

11:08

don't know if that is a result of our

11:10

reporting or a result of the Washington

11:12

Attorney General suing Luluro and

11:16

in part demanding that they refund

11:18

consultants. But people have been

11:21

that I've been waiting more than a year, have started

11:23

to see their checks come in. Let's

11:25

talk about the legal stuff. Let's see

11:27

Luluro is facing a lot of lawsuits.

11:31

Some of them have been settled, some of

11:33

them are still moving through the courts. There have been

11:35

lawsuits alleging that lulu

11:38

Ro stole prints for its clothing.

11:42

The most recent lawsuits

11:45

are the Washington. Washington Attorney

11:47

General sue Luluro, claiming that it was an

11:49

illegal pyramid scheme that made

11:51

misleading income claims and

11:54

encouraged its consultants to focus

11:56

more on recruitment than selling clothes

11:58

to customers. The lawsuit

12:01

also said that a majority of

12:03

people that sold Luluro ended up losing

12:05

money. Luluro has

12:07

denied the claims in this lawsuit, it is still moving

12:10

through the court. Another lawsuit, which

12:12

hit last fall is from Providence

12:15

Industries, which is also known as my Dire, which

12:17

for a long time was Luluro's chief

12:19

supplier, and my

12:21

Dire has sued Luluro for now

12:24

more than sixty three million, claiming that

12:26

it failed to pay its bills for as

12:28

long as seven months, and in some cases,

12:32

some of the money that it says that Luluro owes

12:34

it is for items that

12:36

Luluro said it no longer wanted after

12:38

production, or items that Luluro asked

12:40

my Dire to store until

12:43

it could pay for them. The

12:45

lawsuit from my Dire also claims, and

12:47

here's where things get really juicy, it

12:50

claims that Luluro's founders, a couple

12:52

named Mark and Dan's didham we're

12:54

doing some funky things with the money they owned

12:56

My Dire, like maybe hiding

12:58

the money in shell companies, more

13:00

than twenty shell companies, I think seventeen

13:03

of which were so we're set up over the course

13:05

of two months or so, and

13:07

that they are hiding these assets so they

13:09

can fund their quote unquote lavish

13:12

lifestyle. That's a direct quote

13:14

from the lawsuit lavish lifestyle.

13:17

Finally we get to the Lamborghinis. Actually,

13:20

the cars these folks collect aren't Lamborghinis.

13:22

They're even more expensive. We'll

13:24

tell you all about it on the next episode. But back

13:26

to the courtroom for now. The lawsuit also

13:29

included a quote from Marks

13:31

Stidham that was allegedly said to

13:33

an executive at My Dire that he was

13:35

going to abscond with

13:37

the company's assets and go

13:39

to the Bahamas with his wife. Mark

13:42

has come out and vehemently

13:44

denied this, saying that that is patently

13:47

false. And what is the Stidham's

13:49

defense for not paying for

13:51

all of these They

13:54

are that they don't have the money, no

14:00

one of them.

14:04

Their defense was actually that they don't owe

14:06

the money because the clothing was crappy, which

14:08

I can see, but dude, you figure that out

14:10

way before you owe someone sixty

14:13

three million dollars. Now, there's

14:15

also my dyer has said

14:18

that they demanded

14:20

payment within a certain time frame, and there's a disagreement

14:23

over what that timeframe was. So,

14:26

okay, what you'd expect, and

14:29

this is what I expected when the first season The Dream

14:31

came out. What you'd expect is just hordes

14:34

of Lula Rows sellers coming to their

14:36

defense. That's

14:38

right. Yeah, And there

14:41

has been a little bit of

14:43

that, and Dane

14:45

has really she's very active. Dane Stidham

14:47

is very active on social media. She goes on

14:49

Instagram Live almost every day and

14:52

tries to sort of rally the troops and say,

14:54

you need to speak about

14:57

the gift that lular Row is in your life.

15:00

Tag because of Lula Row. Hey,

15:02

everybody, I am so excited.

15:04

I am in a great movie. Listener this sun

15:09

this is the song I'm a murder. That's

15:12

what we are, man, we are fighters.

15:15

We'll let you dah. That's

15:20

what's about what it's all about.

15:23

And mentors and team leaders

15:26

have told consultants, um

15:29

and I've learned this through interviews that whenever

15:31

you buy a new house or a new car, or

15:33

you know something good happens in your life, you hashtag

15:36

because of Lula Row and share that with

15:38

people on social media. That

15:40

UM, as I interpret it, is sort

15:42

of like a recruitment tool to

15:45

say, hey, look, this is what your life can

15:47

be like if you sell

15:50

Lula Row. We're part of something huge

15:52

and big and growing. And guess what, the

15:55

more we do, the better it gets. The more

15:57

we get, the more we get. Okay,

15:59

I've watched these videos of Lulu Roe's owner, Dan,

16:02

and she's wild. She posts Instagram

16:04

videos while driving. In case you're wondering how

16:06

committed and yet reckless the woman is. She

16:09

looks like she wants to look like Stevie

16:11

Nicks, but instead she just looks

16:13

like a grandma wearing too much makeup and jewelry

16:15

for a trip to the grocery store. Not that there is such

16:17

a thing pilot on ladies. I've

16:20

also seen a video, it's a few years old, of her

16:22

and her husband on the morning news talking about

16:24

how great they are. We have a

16:26

multi billion dollar business. It was

16:29

not built by tricking people into giving us

16:31

their money. Lulu Roe works for you. You don't

16:33

work for Lulu World. You get the product,

16:35

you put it before people, and you sell

16:38

it and you have money. And that's

16:40

the simplicity of this business. And that's

16:43

as easy as it can be. And so

16:45

Dan has really been trying

16:48

to, i guess, restore

16:50

confidence in the consultants that remain within

16:52

the company by going on Instagram live every

16:54

day and saying we're good, everything's fine, We've got

16:56

new styles coming out We've got tons of stuff

16:59

in the pipe blind. Don't

17:01

worry because and also,

17:04

don't read the internet. Don't pay attention to the internet

17:06

because it

17:09

will distract you. You know, it'll distract

17:11

you from your business. You need to work your business. She said

17:13

that over and over again, and in

17:15

the face of criticism. So Haw's her husband,

17:18

Mark, I ask one question,

17:20

how long do you want to be

17:23

upset and angry? It is a choice,

17:25

once again, with your permission. My

17:28

life philosophy is that

17:30

we choose our emotions. I'm

17:33

not asking you to believe that. I'm not

17:35

asking you to buy in. I'm not telling you that

17:37

I'm right. I'm saying that's a philosophy

17:39

that has worked so well for me. Do

17:42

you have a right to be angry? Yes? You do. How's

17:44

that serving you? How does it feel to be angry?

17:46

And do you want to be angry for a minute? You want to be angry

17:49

for an hour? Do you want to be angry for a day,

17:51

for a year? Those choices are

17:53

up to you because eventually, hopefully you

17:56

won't be angry any longer. But it's so

17:58

much better to not be angry. It's so

18:00

much better to be happy and I'm telling you that

18:02

your happiness is a choice. So with

18:04

that, let me just express once

18:09

more, but

18:13

we don't know you all personally. Dana

18:16

and I love you, we

18:18

believe in you, we pray

18:21

for you. So with that,

18:23

thank you very much, have a wonderful evening,

18:26

good night. How

18:39

long do you, dear listener, want

18:41

to be upset and angry? Well,

18:43

you should listen to the next episode where we take you

18:45

deep inside the not so secret but oh

18:47

so decadent world of the Stidhams before

18:49

you decide

19:22

next time on The Dream. The

19:24

way that they were able to build up there they're following

19:26

in their company through social media, is

19:28

also giving fuel to folks who

19:31

want to, I believe, take them down in a

19:33

certain way. A lot of financial

19:35

melffeasance and what accusers

19:38

are saying is that they're saying they're running a pyramid scheme.

19:49

The Dream is a production of Little Everywhere and Stitcher,

19:51

written and reported by Me, Jane Marie and

19:53

Dan Galucci with help from Lyra Smith.

19:56

Were edited by Peter Clowney. Our executive

19:58

producers are Chris Bannon, Dan Glucci and

20:00

Me. We have a brand new season coming out

20:02

in a few months. So don't forget to subscribe,

20:04

and we also appreciate you rating and reviewing

20:06

the podcast anywhere you listen