The tragicomic (failed) prosecution of 'Lyoness Australia'.

In August of 2014, a media release from the 'Australian Competition Consumer Commission,' proudly declared that 'Lyoness'  had been under investigation, and would be prosecuted, as a suspected illegal pyramid / referral marketing scheme cleverly dissimulated behind a 'legal cash back' scheme. 

However, the same document revealed that agents of the 'ACCC' had not yet looked beyond the ends of their noses. Consequently, they failed to acknowledge that the mystifying labyrinth of 'Lyoness' companies has merely been the corporate front for the latest version of an evolving, historically-significant, criminogenic phenomenon which can be accurately described as, blame-the-victim 'Multi-Level Marketing Income Opportunity' cultic racketeering.

In reality, what has become popularly known as 'Multi-Level Marketing' is nothing more than an absurd, cultic, economic pseudo-science. The impressive-sounding made-up term 'MLM,' is, therefore, part of an extensive, thought-stopping, non-traditional jargon which has been developed, and constantly-repeated, by the instigators, and associates, of various, copy-cat, major, and minor, ongoing organized crime groups (hiding behind labyrinths of legally-registered corporate structures) to shut-down the critical, and evaluative, faculties of victims, and of casual observers (including regulators), in order to perpetrate, and dissimulate, a series of blame-the-victim closed-market swindles or pyramid scams (dressed up as 'legitimate direct selling income opportunites'), and related advance-fee frauds (dressed up as 'legitimate training and motivation, self-betterment, programs, leads,' etc.).

http://www.accc.gov.au/media-release/accc-takes-action-against-alleged-pyramid-scheme-operator

ACCC takes action against alleged pyramid scheme operator

28 August 2014

The Australian Competition and Consumer Commission has instituted proceedings against Lyoness International AG, Lyoness Asia Limited, Lyoness UK Limited and Lyoness Australia Pty Limited (together ‘Lyoness’) for operating a pyramid selling scheme and engaging in referral selling.

Although Lyoness has been investigated by regulators for conduct in other countries, this is the first court action taken against Lyoness alleging that the Lyoness Loyalty Program constitutes a pyramid scheme.

Pyramid schemes involve new participants providing a financial or other benefit to other existing participants in the scheme.  New participants are induced to join substantially by the prospect that they will be entitled to benefits relating to the recruitment of further new participants. Pyramid schemes may also offer products or services, but making money out of recruitment is their main aim, and often the only way for a member to recover any money is to convince other people to join up.  In contrast, people in legitimate multi-level marketing schemes earn money by selling genuine products to consumers, not from the recruiting process.

The ACCC alleges that Lyoness has operated the scheme in Australia from mid-2011 and that it continues to operate the scheme. The scheme offers ‘cash back’ rebates to members who shop through a Lyoness portal, use Lyoness vouchers or present their Lyoness card at certain retailers.

Whilst cash back offers themselves are not prohibited by the Australian Consumer Law (ACL), the ACCC alleges that the Lyoness scheme also offers commissions to members who recruit new members who make a down payment on future shopping.

“Pyramid schemes are often sophisticated and may be operated under the guise of a legitimate business. Although these schemes can appear to be legitimate, the most significant inducement for new members to get involved is to earn ‘residual’ or ‘passive’ income from new members signing up,” ACCC Chairman Rod Sims said.

“The concern with pyramid schemes is that the financial benefits held out to induce potential members to join up rely substantially on the recruitment of further new members into the scheme.  For these schemes to work so that everyone can make a profit, there would need to be an endless supply of new members."

“Under the Australian Consumer Law, it is illegal not only to establish or promote a pyramid scheme, but also to participate in one in any capacity," Mr Sims said.

The ACCC also alleges that the conduct by Lyoness breached the ACL prohibition on ‘referral selling’, where a consumer is induced to buy goods or services by the promise of a commission or rebate contingent on a later event.

The ACCC is seeking declarations, pecuniary penalties, injunctions, an order requiring the Lyoness website to link to the case report and costs.

As Lyoness International AG, Lyoness Asia Limited and Lyoness UK Limited are located overseas, the ACCC will be making arrangements for service on those entities.

The first Directions Hearing in these proceedings will be at 9.30am on 16 September, 2014 before Justice Flick in Sydney.

Release number: 

MR 217/14

Media enquiries: 

Media team - 1300 138 917

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October 2015, it has now been announced that 'he ACCC's prosecution of 'Lyoness' has failed, but (to date) no announcement has been made as to whether an appeal will be lodged.

www.news.com.au/finance/business/lyoness-pyramid-scheme-case-thrown-out/story-fnu2q2e9-1227580170737

This latest tragicomic news from Australia perhaps explains why law enforcement agencies have been so reluctant to tackle 'Income Opportunity' cultic racketeers; for a mountain of evidence proves that 'Lyoness' is an extremely dangerous Austrian-based blame the victim cult, which has been churning victims all around the globe, but classically, the persons who prosecuted this Australian case, only presented a tiny part of what they have started to uncover.

This limp quote from Justice Flick's recent ruling, beggars belief 

'The manner in which pyramid selling schemes operate … is complex and elusive. The present Lyoness Loyalty Program is no exception,' 

Sadly for the people of Australia (who pay his salary), Justice Flick doesn't seem to understand that, by their very nature, the external presentations of all pyramid schemes are maliciously designed to shut down the critical, and evaluative, faculties of not only their victims, but also those of all casual observers (including ill-informed judges). Behind the mystifying commercial bullshit lurks a far more simple truth - i.e. pyramid schemes are closed-market swindles - without any significant, or sustainable, revenue other than that deriving unlawfully from their own losing-participants (in the false-expectation of future reward).

In effect, the judge in this Australian case has thrown up his hands and lamely admitted that even he can't understand the mystifying capitalist fairy story offered by the bosses of the 'Lyoness' racket in the guise of an 'income opportunity'. All the same, Judge Flick decided that the 'Lyoness' has exhibited the characteristics of a pyramid scheme, but he has then decided to allow the company to continue without penalty, because (according to the company's own literature) although some rewards were unlawfully dependent on recruiting more and more participants, other rewards were lawfully dependent on the participants buying products.

So if this Judge can't look beyond all the familiar thought-stopping bullshit and recognise what 'Lyoness' actually has been hiding (by only examining the quantifiable results), what chance have victims?

The one common-sense question which no one (least of all himself) seems to have asked Judge Flick, was:

Given its hidden, effectively 100% loss/churn rate, what would be your personal reaction if a member of you own family came to you and said that he/she had signed up for the so-called 'Lyoness income opportunity?'

vimeo.com/66318039


Blog readers should watch 25 minutes into this Canadian 'Dragons Den' linked-video to see the extraordinary effects of the criminal enterprise which Judge Flick has evidently failed to recognise, let alone stop. However, agents of the ACCC did not seek specialist advice before their tragicomic (failed) prosecution of 'Lyoness'. Consequently, ACCC prosecutors did not clearly explain to the judge how 'Lyoness' is an unoriginal cultic racket set up to prevent and divert investigation, and isolate its bosses from liability. 

To demonstrate how little the ACCC boys and girls understood about what they were really faced with, one of the honest and brave whistle-blowing witnesses in the 'Lyoness' case, was Craig Wotton - a former pro-golfer and long-time 'MLM' shill. Mr. Wotton, who once promoted (the now-defunct) 'Vemma' racket, was briefly employed by the 'Lyoness' racketeers as 'Managing Director of Lyoness Australia,' but when they cheated him, he pretended affinity with the regulators and the media, and began playing the role of an honest man trying to protect his fellow citizens from criminals. 

In reality, Wotton is another narcissistic little 'MLM' parasite who immediately began promoting yet another 'MLM' racket, 'Modere,' and he was doing so throughout the recent failed-'Lyoness' prosecution, but ACCC prosecutors completely failed to look further than the ends of their noses.

Meanwhile the 'Lyoness' Ministry of Truth is broadcasting the latest tragicomic news from Australia as absolute proof that 'Lyoness' is an entirely lawful enterprise which has been unjustly attacked as an unlawful pyramid scheme by commercial 'competitors' (presumably, this refers to Mr. Wotton?)

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VIENNA, October 23, 2015 /PRNewswire/ --

Australian Court unmistakably declares: Lyoness is not a pyramid scheme. 

In 2014 the Australian Competition and Consumer Commission ACCC began to investigate the business activities of Lyoness inAustralia on the recommendation of competitors.

The investigation results of the ACCC were submitted to the Australian Federal Court whose decision is now clear: Lyoness is not a pyramid scheme and does not engage in unlawful sales activities.  

"We were able to refute all accusations and clearly documented that Lyoness naturally respects the laws of the country," James O'Sullivan, Managing Director Lyoness Australia, is pleased to say about this court decision.

About Lyoness

The Lyoness group divides its three business areas into two brands: The Lyoness brand encompasses the shopping community and the loyalty program. Their target groups are consumers who want to save money by shopping with Lyoness (Cashback) and loyalty merchants who want to use an international multi-sector loyalty program. The Lyconet brand encompasses all network marketing activities of the Lyoness Group. Its target groups are self-employed people and companies. The Lyoness group is currently active in 46 countries on all continents. Over 5 million members enjoy the Lyoness benefits at over 50,000 loyalty merchants around the world. More at http://www.lyoness.com.

Contact:

James O' Sullivan
Managing Director Lyoness Australia Pty LTD
E-Mail: office@lyoness.com.au
Tel: +61-2-9007-1000

SOURCE Lyoness Europe AG

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www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2015/2015fca1129

In conclusion, Blog readers (particularly those who are legally-qualified) might be fascinated to go through this largely-incomprehensible Australian judgement. It quite literally beggars belief that Australian regulators, and prosecutors, did not confine their courtroom presentation to a detailed deconstruction of the mathematically, and linguistically, mystifying Utopian fairy story habitually recited as reality during 'Lyoness' own presentations, combined with the hidden quantifiable results of the 'Lyoness' racket (i.e. effectively-universal financial losses for a never-ending chain of would-be millionaires).

I guarantee that any ordinary member of the general public (without expert/common-sense guidance) trying to read, and comprehend, the recent Australian judgement, will find his/her critical, and evaluative, faculties, shutting down.

Assuming that he is not corrupt, what Judge Flick evidently failed to understand (by not applying elementary common-sense), is that any so-called 'marketing scheme' which has not had a significant, and sustainable, source of revenue other than its own participants, is a dissimulated closed-market swindle, based on the crackpot, and unviable, pseudo-economic theory that:

Endless-chain recruitment + endless payments by the recruits = endless profits for the recruits.

In the most simple terms, behind all the thought-stopping bullshit, the victims of all closed-market swindles are peddled 'infinite' shares of their own finite money.

I can't be the only well-informed person now wondering if (after completing his recent, dangerous judgement), Judge Flick sang three choruses of 'Walzing Matilda,' before falling down in a heap. 

Sadly, Judge Flick has issued an open-invitation for cultic racketeers to come to Australia, because (on the evidence of this judgement) the chances of them being held to account, are currently zero. That said, there are plenty of them already there.


David Brear (copyright 2015)