The Federal Court of Australia has found TVI Express to be a pyramid selling scheme following action by the Australian Competition and Consumer Commission.
Lualhati Jutsen (also known as Teddi Jutsen), Tina Brownlee and David Scanlon were also found to have breached the law by participating in the TVI Express scheme.
The court accepted evidence that Ms Jutsen transferred $296,985 out of Australia between February and May 2010. Justice Nicholas inferred that this represented the proceeds of membership fees collected from new members.
“It is beyond question that new participants in the TVI Express System are lead to believe that they will receive payments for the introduction of further new participants,” Justice Nicholas said.
“Indeed, the only way a participant can earn any income in the TVI Express System is through the introduction of new members to the scheme.”
A pyramid selling scheme may be defined by new members being required to make a participation payment to another participant in the scheme. This payment must also be entirely or substantially induced by the prospect that new members will be able to earn payments in relation to the recruitment of new members to the scheme.
People who wished to participate in the scheme were required to pay a membership fee of $330. Once an individual had paid the $330, they received a ‘travel certificate’ and the opportunity to receive commission payments for recruiting other people into the scheme.
Pyramid schemes may be identified, in part, by the extent to which the membership fee, or participant payment, bears a reasonable relationship to the value of goods or services that participants are entitled to be supplied under the scheme.
“The scheme has been designed to be operated in a way that makes it extremely difficult, if not impossible, for people to redeem their travel certificate for the purpose of taking such a holiday. For that reason, travel certificates which may be downloaded by new members are likely to be of little or no value to them,” Justice Nicholas said.
The TVI Express scheme was promoted through various websites including the site www.tviteamoz.com and the TVI Express Oz group on facebook.com. The TVI Express scheme extended throughout Australia and internationally.
The Court also found that the three respondents had engaged in misleading and deceptive conduct by making representations that TVI Express was associated with certain companies in the travel industry when it was in fact not.
The proceedings have been stood over, with the court yet to hear submissions in relation to the declarations, other relief and pecuniary penalties sought by the ACCC against the three respondents.
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