The Federal Court has made orders requiring Golden Sphere International Inc, Pamela Joy Reynolds and Victor Michael Cottrill to refund $550,000 to consumers who suffered financial loss through participating in the 'Golden Sphere' pyramid selling scheme.
The Australian Competition and Consumer Commission instituted proceedings in 1996 against Golden Sphere, Reynolds and Cottrill alleging that they promoted, or took part in the promotion of a pyramid selling scheme in breach of the Trade Practices Act 1974 . Pyramid selling typically involves a scheme whereby people pay money for the opportunity to join the scheme and recruit further people into the scheme.
In effect, a chain is created whereby the initial promoters make significant profits but those who join later are often left out of pocket and often in debt as the market quickly becomes saturated. In making the orders, Justice Maurice O'Loughlin was scathing in his assessment of the honesty and credibility of Reynolds and Cottrill, who defended the ACCC's action.
In relation to Reynolds, His Honour stated: "Mrs Reynolds was a most unsatisfactory witness... Added to that, there were aspects of her evidence that were either outright lies or, at least, so incredible as to be unacceptable." In relation to Cottrill, His Honour stated: "He was not an impressive witness. I am satisfied that he also knew that he acted in breach of the TPA and his poor performance in the witness box can be traced back to his attempts to avoid making admissions against his interests.
"As part of their defence, Reynolds and Cottrill argued that the ACCC had no standing to bring the representative proceedings because the interest of the ACCC was different to the interest of the consumers who took part in the scheme. His Honour rejected that argument stating that the fact that the ACCC was acting in the public interest for the protection of consumers whilst the members of the group were pursuing their private interests was not a disqualifying feature.
In addition to the monetary orders, His Honour granted injunctions restraining Golden Sphere, Reynolds and Cottrill from promoting or taking part in the promotion of the Golden Sphere Scheme or any similar scheme. Following these orders, the ACCC will place advertisements in major national newspapers instructing consumers who have suffered loss through participation in the scheme as to how compensation may be claimed.