Another scheme too good to be true?

Banners Broker says it is not a pyramid scheme. So what is it, Investigative correspondent Conor Ryan asks

IN front of a function room full of would-be investors, the chief executive of the Banners Broker franchise in Ireland was unequivocal about the potential to make money.

“Every day you are involved in the company, you wake up the next day and you are richer again,” he said.

To add to the experience, there is a computer panel linked to your online account. This ticks along through the day and night as internet users from India through to the US help boost your revenues.

There were more than 100 people in the room to hear the sales pitch. The vast majority were at least close to the age of retirement.

Some of them had been affiliated for some time. Afterwards, one man said his €5,000 investment had turned into €34,000 since early in the year.

It all sounds too good to be true. But its principals in Ireland and in Canada are adamant the company does not share any of the characteristics of a pyramid scheme.

At last week’s meeting in the Vienna Woods, Glanmire, Co Cork, the man giving the talk was Paul McCarthy, aged 33. He is credited with introducing Banners Broker to this country and told the crowd he once had reservations about the potential of internet businesses.

He did not have an established background in internet advertising, marketing, or sales. He worked in Coca-Cola for 15 years and runs a tyre company on the northside of Cork City.

Mr McCarthy told last week’s meeting he had lost money on the internet in previous investments and was initially cautious.

That was before he happened across Banners Broker last year. He travelled to Spain to check it out and went to Canada to meet the principals, Chris Smith and Rajiv Dixit.

Banners Broker said Mr McCarthy was selected ahead of other candidates.

After his selection Mr McCarthy took over Maconne Online Advertising Ltd, the independent contractor for Banners Broker in Ireland. Under Mr McCarthy, it first set up its office in Mahon but it recently moved to Kinvara House on Dublin Hill with a staff of 23 people. Of those, 10 are full-time.

The firm is only a contractor and handles the accounts on behalf of Banners Broker.

To get a natural account of what Banners Broker’s pitch involves, the Irish Examiner secretly filmed the event at the Vienna Woods on Thursday, Nov 15.

It was one of a regular series of meetings in the same venue, and was not private.

The meeting was addressed by two people. The first was John Barrett, who said he came from a plumbing and heating background but needed to change business because of the economic downturn. The second was Mr McCarthy.

There was also a chance to buy 50 tickets for the gala dinner and speaking event scheduled to take place at the Citywest Hotel this Saturday.

The 45-minute briefing in Glanmire was not the first such event. There had been other meetings in the same hotel.

The West Cork Hotel in Skibbereen hosted another meeting two nights earlier. There have also been publicised gatherings in Tipperary, Waterford, Kerry, and at the Red Cow Hotel in Dublin.

As far back as March, notices on advertised events in the Silver Springs Hotel, Cork.

The promised revenues from those who join Banners Broker are spectacular.

Mr McCarthy pulled up PowerPoint slides that each showed a four-fold return, after the small monthly subscription fee was deducted.

“Let’s say we go middle of the road,” according to the presentation. “Let’s say your budget is $415. What is going to happen is you are going to purchase $415 worth of advertising [and] you will get 40,000 impressions. That will mean your business, your Banners Broker business, will be viewed 40,000 times... minimum earnings is $1,600...

“Lets say you went for an ultimate package, $3,665 — the minimum earnings are $14,560.”

In an interview a number of days later Mr McCarthy said returns required work and people had to manage their own investment.

He said when people make profits it was not all liquid cash and some had to be retained in the company as advertising rights.

But he said the model did work and was similar, but better, than advertising alternatives put forward by Google and Facebook.

Banners Broker is based in Canada but trades in US dollars. This is done through a parent company which has its address in a brass plate service in Belize City, Central America.

Through online discussion forums and at meetings, Banners Broker, its structure, model, and links to previous companies have created doubts.

This means it has had to defend itself against suggestions that its aggressive drive to recruit new affiliates, including the beginning of its world tour in Dublin next week, is an effort to sustain a pyramid scheme.

Its compliance officer, David Hooker, said there were clear differences between its model and pyramid schemes. “Pyramid schemes [money games/Ponzi schemes] are schemes whereby revenues generated by membership fees are used to pay commissions,” he said.

“I can categorically confirm that this is not the case, as all commissions are paid from the income that Banners Broker generates through online advertising and the broker network that manages the 500m-plus websites that are live on the internet today.”

Mr Hooker said the drive to recruit new members was no different than the work of household names in the online market.

“With regards to relying on recruitment, all direct sales companies rely upon recruitment to build their businesses, for the larger the sales force the larger the potential customer base — without recruitment there would be very little growth,” he said.

So far, there has been no public reports of money lost through investments in the company.

Mr McCarthy said 99.9% of Irish people who had invested since 2011 remain involved.

Mr Hooker said the suggestion that there is something improper about its firm is part of a campaign in Ireland.

“From the reports that I have been receiving from many of our affiliates, it is patently clear that there is some form of personal vendetta going on in Ireland, leading us to seek legal guidance to establish the best way to move forward protecting the good name of Banners Broker, [and] its employees, as well as the livelihood of our affiliates,” he said.

Even if the company had a structural weakness, this would not become evident while it was growing at a rate to allow the new entrants cover the investments of those who came first.

But Banners Broker said it has more credit to its name and takes legal compliance very seriously.

Mr McCarthy pointed to the fact that affiliates are supplied with a pre-paid credit card from which they can withdraw their earnings, and MasterCard would not allow this to happen unless the company was bona fide.

“We have a MasterCard,” said Mr McCarthy. “That MasterCard comes through a company called Vector. But we use the MasterCard logo. Would you think MasterCard would leave us use their logo if we weren’t compliant?

“Would you think we would be active in 108 countries around the world if we weren’t compliant? Absolutely not.”

The Vector service does not vet its clients or have any involvement in the service unless users contravene money laundering rules linked to terrorism.

No questions were put to Mr McCarthy during the meeting. People were free to approach him and other staff of the company afterwards.

He also attempted to answer all questions subsequently put to him by the Irish Examiner.

He said individual investors were not told which websites their interest was in because the intermediaries the company used were commercially sensitive.

He said that while his company handles the support service in Ireland, the brokerage for advertising is organised from Canada.

During his public presentation, Mr McCarthy was at pains to distance Banners Broker from the fundamental characteristic of pyramid schemes — that those who become involved have to recruit other members.

“You don’t have to go out and recommend anybody. I never heard that before in the online industry,” Mr McCarthy told the meeting. “For eight weeks I didn’t recommend one single person. But in the meantime I did a lot of research on the company.”

But he himself recognised that the more people individuals draw in, the more money they are liable to make.

“I was told whatever I spent on advertising I would get twice back, and I did,” he said.

“But it wasn’t until I got nine guys together from different backgrounds and different parts of the country that I travelled out to meet the company in Spain. I followed that trip to Canada in December to meet Christopher Smith.”

Mr McCarthy said the company put these enticements in place because it believed people equalled power and it had to build critical mass to compete with Google.

He said it was no different to cable companies giving a bonus to customers who recommended a friend.

The company is ambitious and hopes to gather 1,500 people to the gala dinner in the Citywest Hotel.

Some 50 people will also be invited to seminars and motivational talks. This will kickstart a world tour for the firm’s international management.


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