Appeal fails – $12,000 pyramid selling penalties stand
5 December 1997
The Christchurch High Court has rejected an appeal by Leo van Dijk against his conviction and fine of $10,000 plus $2,000 costs for operating a pyramid selling scheme.
Commerce Commission Chairman Dr Alan Bollard said that all pyramid selling schemes are illegal under the Fair Trading Act.
"I see absolutely no merit in this appeal," Justice Hansen stated in his decision.
The Commission had in May this year successfully prosecuted Mr van Dijk for operating a scheme known variously as "Black Magic 95", "Magic 95," and Black Magic". The prosecution was in the Christchurch District Court.
At the conclusion of the District Court trial, Mr van Dijk's lawyer had conceded that Mr van Dijk had promoted a pyramid selling scheme. The defence centred on whether Mr van Dijk had made a "reasonable mistake" or had placed "reasonable reliance on information supplied by another person", in this case a lawyer.
The District Court rejected these defences and convicted and fined Mr van Dijk. Mr van Dijk then appealed to the High Court, and his appeal has now been dismissed.
Dr Bollard said the Court's decisions highlight an important point about pyramid selling schemes.
"Anyone involved in pyramid selling is breaking the law. Even if you did not start the pyramid, you can be convicted and fined. That is what happened to Mr van Dijk."
The man who started the scheme, Sean Wright, was also prosecuted by the Commission. Mr Wright was found guilty and fined $15,000 plus $2,000 costs.
Penalties totalling $29,000 have to date been imposed against people involved in this pyramid scheme.
Media contact: Fair Trading Manager Rachel Leamy
Phone work (04) 498 0908
Commission media releases can be viewed on its web site www.comcom.govt.nz
