I'm sure that people have lost sites through this method.

The problem that I have with people saying they don't work is that when I heard of the method I bookmarked well over 100 of these types of sites from different people with different backlinks with different levels of content.

Almost ALL of them that were on page one are still on page one even today after MayDay and the rest of these "deindexing" horror stories.

I personally made a handful of these sites and all of them are gaining rankings gradually without any being deindexed.

What I would say about people who lose ALL their sites is that they must have been doing something wrong. For example I know one girl who made a number of these and used a certain backlinking service to get ranked for every site without any other backlinks. She lost rankings. It was an issue with the backlinks being less powerful than before versus a micro niche site problem. When she changed her source of backlinks, her rankings went back up.