Conmen got €20m from pyramid scams

BENEFICIARIES of two controversial pyramid scams in Ireland allegedly netted €20m in the space of several months, new figures show.

The Liberty Chart System and Speedball schemes swept Cork, Kerry and Clare earlier this year as “investors” were persuaded to part with large sums of money.

Lured by promises of netting even greater sums by recruiting other “investors,” many were left empty-handed as the number of potential recruits dried up and the pyramid scheme collapsed.

Yesterday, the shocking extent of the money invested was revealed as the Government launched a year-long blitz to educate the public about scams.

Ann Fitzgerald, who heads the Government’s National Consumer Agency (NCA), said pyramid scams inevitably collapse and cause people to lose large amounts of money.

“A pyramid scheme confuses people into a complicated but convincingly ‘foolproof’ money-making scheme.

“They make money by recruiting people so, for everyone to profit, there would have to be an endless supply of newcomers which there never is.

“The main problem is that pyramid schemes are mathematically impossible — but most people don’t understand the basics,” she said.

Gardaí who investigated the Liberty and Speedball pyramid scams estimated that “investors” at the bottom of the pyramid lost about €20m.

“Investors” had handed up to €10,000 each to organisers with the promise they would receive €80,000 in “profits”.

Gardaí discovered that two of the pyramid schemes operated out of Germany while another in Co Meath, called “People in Profit” originated in Malaysia.

Ms Fitzgerald said the way pyramid schemes worked meant the people who started them reaped all the rewards, leaving newer recruits to shoulder the losses.

“Because pyramid schemes rely heavily on people recruiting friends and family, we find that relationships, friendships and marriages can be destroyed.

“People further up the chain are sometimes even threatened by angry investors they have recruited,” she said.

The NCA’s campaign against pyramid as well as lottery and internet scams forms part of a year-long €750,000 radio, television and poster advertising blitz about consumer rights.

The NCA has also dedicated part of its new website — consumerconnect.ie — to alert the public to such scams, revealing how they can avoid falling victim to cheats.

Under a reform of consumer laws, the Government is toughening up pyramid legislation to tackle cash-only schemes like Liberty and Speedball.

Gardaí said they were frustrated in tackling the schemes under existing trading laws as they lacked powers to search premises, make arrests and question people.