Promoter fined $4,500 for involvement in SkyBiz multi-level selling scheme
Gregory Ian Dawson was fined $4,500 plus $1630 costs in the Auckland District Court on Friday having pleaded guilty to
breaching the Fair Trading Act in relation to his involvement in US-based international multi-level selling scheme
SkyBiz between 1999 and 2001.
The prosecution, brought by the Commerce Commission, comes hot on the heels of the Commission’s recent successful
prosecution of pyramid scheme Infinity Concierge and its promoters.
The SkyBiz scheme involved the sale of website programmes or ‘WebPaks’, for US$100 per year, plus a one-off US$25
establishment fee. Individuals were recruited over the internet to promote the purchase of these WebPaks, with the lure
of vast profits.
New recruits to the scheme were required to sell WebPaks to at least two others in order to qualify to receive
compensation. However, further down line sales of at least nine WebPaks were required before the recruit was eligible to
receive any of this compensation.
Director of Fair Trading Deborah Battell said that the Commission decided to take action against Dawson as he had been
identified as being one of the major participants and promoters in New Zealand of what was a now defunct US-based
company.
“The Federal Trade Commission in the United States stopped SkyBiz from operating and the company subsequently ceased
operations in March last year. Other court action against the promoters of SkyBiz has been taken in both Australia and
Canada,” she said.
Background Earlier this month, the Christchurch District Court fined Infinity Concierge and its operators a total of
$38,760 including costs for operating or promoting a pyramid selling scheme, in breach of the Fair Trading Act.
Two New Zealanders, Rodney McColl and Kenneth Olorenshaw, were among four men who pleaded guilty to the charges of
promoting the British-based international selling organisation. A fifth man, David John Mawson, will be sentenced on
Thursday 10 April in the Christchurch District Court. -------------------------------- A bill currently before
Parliament would, if enacted, significantly increase the penalties for operating a pyramid scheme. Under the proposed
Fair Trading Amendment Act, operators would face penalties of up to $200,000 (for companies) or $60,000 (for
individuals). In addition, the courts could fine people up to the value of any commercial gain resulting from the
scheme.
-------------------------------- The Commerce Commission recommends some basic precautions to avoid getting drawn in to
a pyramid scheme: Be wary when approached to join schemes where there are promises made about future earnings that
require people to recruit members to obtain those earnings. Be extremely cautious if you are encouraged to borrow money
to join a scheme on promises of easy returns. Always consider getting professional independent advice (for example, from
an investment advisor or manager at your local bank, an accountant or a lawyer) before investing money in any scheme.
Don’t rely on claims made by the promoters or by people who claim to have made money from the scheme. If it sounds too
good to be true, it probably isn’t true.