Issue Date:  -  Wednesday, 19 May 1999

Pyramid scheme warning - Vanilla Gold Accumulation Program

The Commissioner for Fair Trading, Patrick Walker, today warned consumers about Vanilla Gold Accumulation Program, a suspected pyramid scheme.

Mr Walker said the Crown Solicitors Office had provided advice suggesting that the Vanilla Gold Accumulation Program was a pyramid scheme.

"Pyramid schemes are illegal under the Fair Trading Act. Anyone who promotes or participates in such a scheme could be fined up to $20,000," Mr Walker said

The Vanilla program requires participants to purchase gold coins from Vanilla Distribution PLC, a company based in Gibraltar.

Payment for the gold is made by way of a small initial deposit where participants are encouraged to find and recruit new participants to earn "commissions" to pay for the balance owing on the gold.

Mr Walker said pyramid schemes do not work because they are based on the idea that there are an unlimited number of people available to be recruited.

"All pyramid schemes eventually collapse, and as a result, people lose money," he said.

Fair Trading had received calls alleging that promoters had said the scheme had been approved by the Ministry.

"Such claims are clearly false and will be investigated in addition to the alleged pyramid offences," Mr Walker said.

Consumers have the right to recover their losses through private legal action against any person involved in promoting a pyramid scheme, regardless of the outcome of the Ministry's investigation.

In Victoria last month, Goldnet International Pty Ltd and its former director, Mr Dragan Jockovic, were fined more than $40,000 for breaching that state's Fair Trading Act.

The Victorian Office of Fair Trading and Business Affairs compared Goldnet with the Vanilla gold bullion scheme.

The Victorian Director, Ms Jane Reynolds, had confirmed that a promoter of the Vanilla scheme was under investigation for alleged referral selling offences.

Please Note

In October 1999, several months after the above media statement was released, Mr Dragan Jockovic obtained a rehearing of the charges against him. Five of the six charges were withdrawn or dismissed, with the remaining charge found to have been proved. As a result, ultimately the only penalties against Mt Jockovic were that he was personally placed on bond for twelve months, and he was ordered to pay $300 into the court fund and $100 costs. The fines and other orders against Goldnet International Pty Ltd remained intact.