Court rules travel company was Ponzi scheme
The Federal Court has determined that a business offering discounted travel and accommodation deals, along with opportunities for customers to make money from offering those same deals to others, was operating as a pyramid scheme.
The decision against TVI Express System was prompted by an investigation by the Australian Competition and Consumer Commission. The Federal Court found that TVI offered discounts to members, who had to sign up through a website and complete an application form, along with a fee of $US250.
Each person was given a unique user ID and then told they would receive a travel certificate that would entitle them to free accommodation for a week, a free flight, a virtual back office, an online travel portal, a website and other business tools.
Justice Nicholas concluded the company’s founders Lualhati Jutsen, Tina Brownlee and David Scanlon were operating a pyramid scheme. They transferred $296,985 out of the country between February and May 2010, made up of the money collected from members.
Members were encouraged to recruit new members so they could move up ranks and join the “Express Board”, as moving up each rank could earn the member more credit in a virtual wallet.
“The interface of the travel portal featured a number of icons for each of the different types of service such as air, car, cruises, hotels and “last minute deals”. However, the deals that were available through the travel portal were in substance the same as those which were available to the general public through the free website operated by the well-known travel business, Travelocity.”
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