Politicians call for tighter laws on pyramid schemes
Fine Gael Justice spokesman Jim O’Keefe said a scam sweeping his constituency of Cork South West was conning locals into thinking they could make tens of thousands of euro in profits.
“Details of the scheme are spread by word of mouth and people are then invited to a hotel for a Powerpoint presentation,” he said.
“They are asked to invest €10,000 to get a return of €80,000, and to also bring in two more people and so on down the line.”
Labour’s enterprise spokesman Brendan Howlin said those who became involved faced possible charges under the Criminal Justice (Theft and Fraud Offences) Act 2001.
He said: “It is clear these ‘gifting’ schemes are simply a variation on the pyramid selling scams outlawed by legislation in 1980.
“The net result of this scheme is that while large numbers of people may invest money, only those in at the beginning will have any chance of benefiting.
“The majority will lose out and could, in fact, face criminal proceedings.
“Unfortunately, current legislation does not outlaw these gifting schemes,” he said, calling on Enterprise Minister Micheál Martin to close the gaps in the law.
Mr O’Keeffe also called for legislation covering pyramid schemes to be overhauled.
“The fines for offences are ridiculously low. In the district court, the maximum fine is €630. When you’re talking about the amount of money involved in the current scheme, those fines are derisory,” he said.
One Corkman said he was invited into the scheme by friends but he refused to pay €5,000.
“You’re getting somebody else’s money so somebody always loses,” said the man, who wished to remain anonymous.
“By the sixth cycle of the pyramid, 1,023 people are involved with a total fund of €10.2 million. Of the people, 896 will lose money and only 127 receive money,” he added. Gardaí confirmed earlier this week that they were monitoring a pyramid-style investment scheme in west Cork and Kerry, where participants are voluntarily advancing five-figure sums to be lodged in Germany without any promise of financial return.
The scheme, which involves figures of around €10,000 being offered on a ‘gift’ basis, is mushrooming out of control in the southwest, gardaí warned.
Participants are invited to travel to a Munich hotel for hand-to-hand transactions involving cash only.
The initial contribution is €10,000 and has to be handed over in €500 notes.
Participants are advised the donations are a gift given freely, without expectations of financial return.
Up to 10 meetings were held this week in the west Cork and Kerry region.
At a midweek Bandon meeting, up to 120 people - mainly young men, some known to be in business, farming and construction - were addressed by a woman who did not introduce herself during a 40-minute presentation.
