IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

STATE OF OREGON     )
                    )ss.
County of Multnomah )
 

I, Sidney Schwartz, being sworn say:

1. I am the person who is the subject of the pending motion to compel filed by Amway Corporation. I work in an office in my home in Beaverton, Oregon. Most of my work is done on my home computer.

2. I have been actively interested in computers since approximately 1981. From 1982 to 1988 I worked in computer and software retailing, including two years as manager of the Egghead Software store in Beaverton. I've been a Compuserve member once approximately 1982.

3. When my wife and I had our first child, I decided to become a full-time stay-at-home father. I then began to investigate home business opportunities on my computer at home.

4. I regularly participated in on-line forums devoted to home business and self-employment issues, primarily the Working From Home forum on Compuserve. I researched and shared information on home business opportunities, particularly multi-level-marketing, franchising and other "seller assisted" business opportunities.

5. Paul Edwards, who manages that forum, and his wife Sarah, are recognized home business experts; they have written seven books, host a radio and TV show on the subject, put on seminars across the country, and were part of a group of self-employment experts invited to consult with President Bush. Being familiar with my knowledge of the subject and activities as a consumer advocate, Paul Edwards asked me to be a section leader on the Working From Home forum, which I did for a number of years. The Edwardses also contracted with me to consult with them on their book "Home Businesses You Can Buy."

6. In the course of my research I increasingly focused on Amway, which I came to regard as the biggest scam in this field. I was posting information regarding Amway on the Working From Home forum as far back as 1990. In addition to Compuserve, at various times I was a member of other on-line services, including Prodigy, America On-line, and in approximately 1993 also began participating on an Internet forum devoted to multi-level marketing. I shared the results of my research into Amway on all these venues.

7. In the first week of January, 1996 I set up my own web site, "Amway: The Untold Story." With a web site, any member of the public with access to the Internet could find and benefit from the information I had compiled, and I was relieved of the burden of having to constantly duplicate the same information in response to individual requests.

8. Since the web site was first created, I have regularly been contacted by and asked to provide information and opinions to individuals, companies, attorneys and journalists. I have always complied with these requests whenever possible. I have always been the sole determiner of what is published on my web site. Information not published includes confidential information and information that would identify sources I feel should be protected. Of the approximately 3.5 megabytes of information on my site, less than 5% is concerned with Procter & Gamble's lawsuit against Amway. At least 30 other web sites refer to my site as a source of information on Amway.

9. Amway is a privately-held company owned and operated by members of the families of its founders, DeVos and Van Andel. As a private company it is not required to provide the same information about its business that a public company is. Amway is required by the FTC, which found Amway guilty of grossly exaggerating the income potential of Amway distributorships, to publish certain average earnings information. Other than this minimal information, Amway refuses to voluntarily divulge any data regarding how many distributors have achieved the kind of incomes that are commonly dangled like a carrot before the faces of potential Amway recruits. Amway and most other multi-level marketing companies are also exempt from state and federal franchise/business opportunity laws that require the vendors of such opportunities to disclose financial and company background information to potential investors, and again Amway does not voluntarily publish such information. I believe the secretive nature of the company accounts for a good deal of the interest in the Amway information available on my web site. As of this morning my AUS web site has had 250,709 "hits" or visits by computer users.

10. I believe I can provide more information about Amway than is available from anyone except the deepest insiders and Amway itself.

11. In September of 1996, I was contacted by and shortly thereafter engaged by counsel for Procter & Gamble in the Utah case to supply it with information which I had accumulated concerning Amway. I have been so engaged since then. All my communications related to this engagement have been with counsel. I do not expect to testify at trial.

12. During the course of my Amway research, I became acquainted with a pro- Amway economist named Paul Zane Pilzer. He later became an Amway distributor and invited me to Ada, Michigan, on behalf of Amway and at Amway's expense, to discuss with an Amway Corp. vice president the issues raised on my web site. I declined the invitation because I was not convinced that Amway had suddenly taken a genuine interest in addressing these problems after allowing them to continue, if not actively encouraging them, for so many years. I also declined Mr. Pilzer's invitation to appear with him at an Amway rally in Portland, because I am not an Amway supporter. In fact, my research has caused me to be a long-time Amway opponent.

13. Mr. Pilzer, with whom I had a cordial relationship, tried to change my views about Amway. Soon after those efforts were unsuccessful, service of the first subpoena in this matter was made on me on April 2, 1997.

14. After my lawyer sent a letter to Amway's counsel objecting to the subpoena, Amway posted on its web site that I had been retained as Procter & Gamble's expert. A copy of the posting is Exhibit A to my affidavit. I first saw it in early May, 1997.

15. Exhibit B to my affidavit is a portion of the Amway "Amagram" publication for August of 1997 dealing with negative information about Amway on the Internet. I think it refers to me. It is gratifying that Amway recognizes that the Internet is "a massive forum for free speech" which is "a fundamental value of a free society."

16. I dispute the charges contained in Amway's memorandum in support of its motion to compel concerning the Amway-related information on my web site.

Subscribed and sworn to before me this 8 day of September, 1997