Commerce Commission warns churches about pyramid schemes

Associate Commissioner Joseph Liava’a was commenting after three people were fined for promoting a “cash-gifting” pyramid scheme that targeted the Pasifika community in South Auckland. The “6K scheme” was promoted by Frances Saimone and Patricia Pousini through in-person events and posts on Facebook.

It is estimated that at least 240 people took part in the scheme, and that between $225,000 and $336,750 was invested by participants.

Saimone told participants” “We are not a pyramid scheme, first of all because a pyramid is illegal . . .  gifting has been around since Adam and Eve.”

Hundreds of people were recruited into the cash-based giving scheme with a promise of a return of up to $6000. Participants could “gift” $750 individually or as a unit, and had to recruit new people for the scheme.

Liava’a said that pyramid schemes often thrive in close-knit communities, including churches, because of the trust that exists within these groups. Those who lost money in the scheme told the Commerce Commission that they joined to escape poverty and secure a better future for themselves and their children.

Saimone was the leader of the scheme and was fined $33,306 in the Manukau District Court for her involvement, and was ordered to pay reparation of $1500 shared between two victims. Pousini was one of the main promoters and was fined $10,200.

Feleti Halafihi was found guilty of failing to provide information regarding the scheme, and was initially issued with a notice requiring him to meet with the Commission. He failed to do so and was fined $9000.

Pyramid schemes are illegal under the Fair Trading Act. The schemes rely on constant recruitment of others. They typically collapse as they run out of recruits.

FULL STORY

Trio fined over involvement in pyramid scheme (1News)