Three convicted over pyramid selling scheme

Three businessmen have been convicted and ordered to pay $140,000 in the Auckland District Court for promoting a pyramid scheme in 2011.

Rangi Savage, Robert Rowe and Stewart Porter promoted Fastrack90 predominantly in South Auckland, telling prospective members that the potential return was “huge” – at least $US10,000 in 90 days, with a “minimum potential income” of $US160,000.

According to the Commerce Commission, this was a pyramid scheme, as the only way members could make money was by recruiting new participants in order to move up the pyramid. 

The commission says almost 30 people joined the scheme, with some paying more than $10,000 to join. None of the members received any payment from Fastrack90 and all have lost the money they paid to join the scheme.

“There was no way to make money from the scheme – no “product” to sell – other than by recruiting new participants,” Commerce Commission consumer manager Stuart Wallace said in a statement.

“It’s an old adage but, if it sounds too good to be true, then it probably is.
“This scheme has caused untold grief and hardship for people who could little afford it. Not only have members lost their own money but, by convincing other family members and friends to join the scheme, they have contributed to their loss as well. 

"This has, in some cases, caused the break-up of families and long-time friendships.”

At the hearing, Judge David Harvey described pyramid schemes as scams that “rely on promises of dreams rather than promises of reality.”

Fastrack90 was targeted at “hard-working average New Zealanders” who were “unsophisticated and vulnerable.”

Because pyramid schemes are unfair, they are “deemed to be unlawful, involve misleading and deceptive conduct, and offend against ethical business practice.”

Judge Harvey noted that, if the defendants had the ability to pay, he would have imposed fines of $93,750 against Mr Savage, $75,000 against Mr Rowe and $67,500 against Mr Porter.

However, Judge Harvey reduced the fines because the men had no means to pay those amounts.

Mr Savage was fined $40,000, and Mr Rowe and Mr Porter $20,000 each. Judge Harvey also ordered them to pay reparation to the victims totalling $60,000.