Mobile Apps With Pyramid Recruitment?
Merlim Network was founded in 2014 and is the MLM division of Magitek International.
Magitek International is a mobile app developer based out of Colombia. The company also has a presence in Brazil, Ecuador and Nigeria.
Heading up Magitek International and Merlim Network is Fredy Morelo, who serves as CEO of both companies.
Neither Merlim Network or Magitek International provide any information whatsoever regarding Morelo’s corporate history on their website.
Perhaps due to language barriers, I was incapable of finding any information myself. From the looks of it however, Merlim Network seems to be Morelo’s first MLM venture.
Read on for my complete review.
Merlim Product Line
Merlim Network market apps created by Magitek International:
- Merlim Toons – “a utility app that allows you to send feelings, actions and moods while you interact with friends and family through social networking sites or apps” ($5)
- Merlim Master – “created for and by entrepreneurs of the network marketing industry as a management tool to allow you to have all the necessary options to administrate your business in this industry” ($50)
- Merlim Cardboard – “a portable device which allows you to experience virtual reality from your mobile phone” ($25)
- Go Hender VR – VR puzzle game ($25)
- VR Tek – a “portable VR visualization device” ($70)
- Joystick Bluetooth – “this Bluetooth controller allows you to interact with the virtual environment” ($15)
Merlim Network also markets a variety of mobile games, as well as an app development service for nightlife venues, hotels and eateries ($1 to 10).
Merlim Ads is an in-house ad network used to display advertising to users of Magitek International’s apps.
- 1000 impressions plus banner design = $40 a month
- 2000 impressions plus banner design = $70 a month
- 3000 impressions plus banner design = $100 a month
- 4000 impressions plus banner design = $130 a month
The Merlim Network compensation plan references online tournaments, which keys can be purchased for. It reads:
“An activation Key or T-KEY grants a user or Member access to an Online Tournament in which participants many win cash prizes by winning on the first three places by the end of the tournament.”
No additional information about the nature of these tournaments is provided.
Merlim Compensation Plan
The Merlim Network pays members to market Magitek International apps.
Merlim Network members are also directly and residually paid when they recruit new members.
There are six member ranks within the Merlim Network compensation plan.
Along with their respective qualification criteria they are as follows:
- Wood Cane – recruit at least one member
- Bronze Staff – recruit at least three members and generate an accumulated 800 binary team points
- Silver Staff – recruit at least four members (three of which must be ranked Bronze Staff or higher) and generate an accumulated 6000 binary team points
- Golden Staff – recruit at least five members (three of which must be ranked Silver Staff or higher) and generate an accumulated 18,750 binary team points
- Platinum Sword – recruit at least six members (three of which must be ranked Golden Staff or higher and two Silver Staff or higher) and generate an accumulated 56,250 binary team points
- Diamond Crown – maintain at least six recruited members (three of which must be ranked Platinum Sword or higher and two Golden Staff or higher) and generate an accumulated 150,000 binary team points
Commission Earnings Cap
Merlim Network members are subject to the following weekly commission earnings cap:
- Wood Cane – $300 a week
- Bronze Staff – $3200 a week
- Silver Staff – $6000 a week
- Golden Staff – $12,000 a week
- Platinum Sword – $24,000 a week
- Diamond Crown – $48,000 a week
Direct App Commissions
Merlim Network members earn commissions when Magitek apps are bought by retail customers and recruited members.
- general app commission is 50%
- app development for businesses is 20%
- Merlim Ads advertising purchases pay a 20% commission
Residual App Commissions
Residual app commissions are paid through a uni-level compensation arrangement.
A uni-level compensation arrangement puts a member at the top of a uni-level team, with each personally recruited member placed directly underneath them (level 1).
If a level 1 member recruits new members, they are then put on level 2 of the original member’s uni-level team.
If a level 2 member recruits new members, they are then put on level 3 and so on and so forth down a hypothetical endless number of levels.
Merlim Nework caps payable uni-level levels at 5, with members paid a percentage of app sales produced by their uni-level team as follows:
- general app commission rate is 5%
- Merlim Ads commission rate is 2%
Merlim Network members earn a 10% commission when they recruit new members.
Residual Recruitment Commissions
Residual Recruitment Commissions are paid to Silver Staff and higher ranked members, through the same uni-level compensation arrangement as Residual App Commissions.
When a new Merlim Network member is recruited, the following points are produced:
- Premium Bundle member = 80 points
- Gold Bundle member = 140 points
- Platinum Bundle member = 200 points
Commissions are paid as a percentage of these produced points as follows:
- level 1 (personally recruited members) – 7%
- level 2 – 5%
- level 3 – 3%
Residual Binary Commissions
Residual binary commissions are paid through a binary compensation arrangement.
A binary compensation arrangement puts a Merlim Network member at the top of a binary team, divided into two sides (left and right).
The initial level of the binary holds two spots. The second level of the binary team is produced by dividing each of these two spots into another two spots each (4 spots).
Succeeding levels of the binary team are produced as required, with each new level holding twice as many spots as the previous level. Note: There are no restrictions as to how deep a binary team grows.
Spots in the binary team are filled through direct and indirect recruitment of new Merlim Network members.
Commissions are paid based on points produced by app purchases and member recruitment:
- tournament keys – 3 points
- sale of Merlim Toons – 3 points
- sale of Merlim Master – 25 points
- sale of Go Hender game – 13 points
- sale of business apps – 100 points
- Merlim Ads sales – 15 to 60 points
- recruit a Premium Bundle member – 80 points
- recruit a Gold Bundle member – 140 points
- recruit a Platinum Bundle member – 200 points
At the end of each day, produced points are tallied up on both sides of the binary team.
Commissions are paid on matched volume as follows:
- 80 points matched on both sides of the binary team = $40 commission
- 140 points matched on both sides of the binary team = $70 commission (only payable to Gold and Platinum Bundle members)
- 200 points matched on both sides of the binary team = $100 commission (only payable to Platinum Bundle members)
The biggest amount of points match able is calculated first, with the lower matches used to match leftover volume amounts.
Note: The first volume match each day is not paid out on.
Unmatched points are rolled over and the new points are tallied up again the next day.
The Leadership Bonus is a 7% bonus pool made up of Merlim Network’s company-wide revenue.
The Leadership Bonus pool is divided into 4 smaller pools, which correspond to Merlim Network member ranks as follows:
- Silver Staff – 1% pool
- Golden Staff – 1.5% pool
- Platinum Sword – 2% pool
- Diamond Crown – 2.5% pool
Merlim Network members earn a share in the pool that corresponds with their respective member rank.
Merlim Network membership is completed by the purchase of a member bundle:
- Premium Bundle – $330
- Gold Bundle – $530
- Platinum Bundle – $930
Each Bundle comes with a collection of Magitek International app licenses.
Merlim Network – Our Conclusion
Without member recruitment commissions, the legality of Merlim Network would depend on whether or not the mainstream of company-wide revenue was derivative of retail app purchases or membership fees.
With member recruitment commissions, Merlim Network is operating as a pyramid scheme, so how much retail revenue is being produced is therefore immaterial.
I find it hard to believe there’s any noteworthy retail app purchase activity going on. The website reads:
“Merlim Network is technology platform created by Magitek and which allows ou to benefit from internet and new technology trends.”
Merlim Network’s apps and products are very much of the “me too” variety, in that they’re just imitation copies of existing ideas. Merlim Cardboard ($25.00) and Google Cardboard ($15.00) is perhaps the most apparent example.
That Magitek International apps are bundled with Merlim Network member packages is significant. There’s no need for it, other than to force revenue through the company to pay commissions with.
Merlim Network’s tournaments with cash prizes also sound a lot like gambling (detailed information on tournaments is noticeably absent), which may trigger regulatory issues later on down the line.
Nowhere in the Merlim Network compensation plan are retail commissions relevant, outside of the base commission rates paid on sales.
The enormous majority of the Merlim Network compensation plan is geared toward paying a package fee and then recruiting new members who do the same.
All of this together strongly proposes that member fees are the chief source of revenue being produced within Merlim Network.
This makes Merlim Network a pyramid scheme.
Once recruitment of new members dies down, Merlim Network loses its main revenue source and the scheme fails.
Aaron and Shara What Do You Suggest?
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