A further Commerce Commission prosecution has brought the total fines and costs imposed on people involved in the Black Magic pyramid selling scheme to $29,000.

Commission Chairman Dr Alan Bollard said that the Henderson District Court yesterday convicted Aucklander Sean Robert Wright of operating the scheme and so breaching the Fair Trading Act. Mr Wright was fined $15,000 and ordered to pay $2,000 solicitor's costs.

Dr Bollard said that a Christchurch man, [Concealed under the Criminal Records (Clean Slate) Act 2004], had previously been fined $10,000, plus $2,000 costs, for promoting Black Magic. [Concealed under the Criminal Records (Clean Slate) Act 2004] has appealed against his conviction.

All pyramid selling schemes are illegal in New Zealand. They are prohibited by the Fair Trading Act.

The fine imposed on Mr Wright is the highest to date under this Act against an individual. Individuals can be fined up to $30,000, and companies up to $100,000.

"Anyone considering getting involved in a pyramid selling scheme should consider these cases very carefully," he said. "Mr Wright started Black Magic and received a higher fine, but it cost [Concealed under the Criminal Records (Clean Slate) Act 2004] $12,000 for promoting it.

"You do not have to be the person starting the scheme to break the law. Promoting it is illegal too."

Expert statistical evidence showed that no matter what structure a pyramid uses and irrespective of how many people are involved, only a small group at the top can ever make money. Some people may recover their costs, but the biggest group at the bottom of the pyramid must lose money so that those at the top can make money.

In addition, pyramid schemes always collapse because of the huge numbers of people that must be involved.

"All sorts of claims are made to get people into schemes," Dr Bollard said. " Black Magic was, supposedly, 'the most exciting money making venture you have ever heard of!'. Mr Wright even falsely claimed that the Commission had said that his scheme was legal.

"But at the end of the day, pyramid selling is nothing but a way for people to lose their money.

"The few people at the top might make money, but only because the big group of people at the bottom always loses. On top of that, the Courts have shown that promoting the scheme is enough to be prosecuted and fined.

"And anyone can take action in a court or the Disputes Tribunal. That is one of the strengths of the Fair Trading Act. It does not rely on just the Commission to enforce it, everyone has the power to take action against pyramid selling and other breaches."

Media contact: Fair Trading Manager Rachel Leamy

Phone work (04) 498 0908, cellphone 021 661 104, home (04) 479 6334

Communications Officer Vincent Cholewa

Phone work (04) 498 0920, home (04) 479 1432