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this case was filed, petitioners resided in Placerville,
California.
Petitioner is a self-employed salesman and distributor for
several multilevel marketing companies (companies) and has been
engaged continuously in this activity since 1982. Petitioner has
sold products for many companies, including Omnitrition
International, Inc., Herbalife, Biometrics, Nutrition Express,
Matol, New Vision, and TMI International. Mrs. Jones has not
been involved with petitioner's sales or distributor activities
since 1982.
The companies petitioner is involved with all have a similar
multilevel marketing system (the system). Under the system,
petitioner finds customers for a company's products and then
recruits customers who are enthusiastic about the products as
distributors. To become a distributor, the customer completes an
application, which petitioner supplies, and mails it to the
company. On the application form, petitioner's name is entered
as the sponsor or "up-line distributor" for the applicant. The
distributors recruited by petitioner may repeat the process of
finding customers and recruiting them as distributors. The
distributors recruited by petitioner are considered first-level
distributors. The distributors recruited by the first-level
distributors are, with reference to petitioner, second-level
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