Pyramid scheme organisers ordered to pay over £500,000
Following convictions for their roles in a pyramid selling scheme, the CMA has secured a total of £535,454 in confiscation orders and prosecution costs from 6 organisers.
Confiscation orders totaling £333,138 and prosecution costs of £182,172 were made against Laura Fox, Carol Chalmers, Jennifer Smith Hayes, Susan Crane, Mary Nash and Hazel Cameron at Bristol Crown Court by His Honour Judge Horton between 20 and 21 July.
The Chair of the committee, described by Judge Horton as the “driving force behind the scheme”, Laura Fox, and 2 other committee members, Carol Chalmers and Jennifer Smith Hayes, were sentenced in February 2013, to 9 months’ imprisonment for ‘promoting’ and ‘operating’ a pyramid promotional scheme contrary to the Consumer Protection from Unfair Trading Regulations 2008 (the Regulations).
After pleading guilty, Susan Crane, Mary Nash and Hazel Cameron were sentenced in October 2014 to 6 months’ imprisonment for ‘promoting’ and ‘operating’ a pyramid promotional scheme contrary to the Regulations. In the case of Hazel Cameron, her sentence was suspended for 2 years.
All defendants have a maximum of 3 months to make the payments ordered by the court.
In addition, Laura Fox, Carol Chalmers, Jennifer Smith Hayes, Susan Crane, Mary Nash and Hazel Cameron were each ordered to pay a contribution to prosecution costs of £30,362 for a total of £182,172.
Stephen Blake, Competition and Markets Authority (CMA) Senior Director responsible for criminal enforcement, said:
These orders demonstrate our commitment to ensuring to the fullest extent possible that those who are convicted of offences in breach of consumer law do not benefit from their criminality. This is in addition to the sentences that have already been imposed and the loss of reputation. These defendants operated a sophisticated pyramid promotional scheme with the aim of making money at the expense of others. The public should remain vigilant in respect of such pyramid promotional schemes. If it sounds too good to be true, it probably is.
| Defendant | Confiscation order | Costs order | Total | Sentence in default |
|---|---|---|---|---|
| Laura Fox | £125,638 | £30,362 | £156,000 | 24 months |
| Jennifer Smith-Hayes | £81,550 | £30,362 | £111,912 | 18 months |
| Susan Crane | £50,800 | £30,362 | £81,162 | 15 months |
| Hazel Cameron | £34,650 | £30,362 | £65,012 | 11 months |
| Mary Nash | £23,000 | £30,362 | £53,362 | 9 months |
| Carol Chalmers | £17,500 | £30,362 | £47,862 | 8 months |
| TOTALS | £333,138 | £182,172 | £515,310 |
Notes for editors
- The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. From 1 April 2014 it took over the functions of the Competition Commission and the competition and certain consumer functions of the Office of Fair Trading, as amended by the Enterprise and Regulatory Reform Act 2013.
- Pyramid promotional schemes are those where the ‘compensation’ (that is, money or ‘winnings’) for participants is derived primarily from introducing others, rather than from the sale of a product or service. Such schemes are automatically unfair commercial practices under the Consumer Protection from Unfair Trading Regulations 2008. They are distinct from promotional arrangements under which compensation payments are derived from the sale of a product or service. Unlawful pyramid promotional schemes may involve products or services, but these will generally be overpriced or have no real resale value, the primary source of the compensation for participants being derived from introducing others to the scheme, such as through large joining fees.
- In September 2014, the CMA announced that it had secured nine convictions in relation to ‘promoting’ and ‘operating’ a pyramid promotional scheme under the Consumer Protection from Unfair Trading Regulations 2008.
- Three women were found guilty after trial in July 2012 of ‘promoting’ and ‘operating’ a pyramid promotional scheme under the Consumer Protection from Unfair Trading Regulations 2008. Each was sentenced to 9 months’ imprisonment in February 2013. These sentences have been served. They were: * Laura Fox – Chair of the scheme * Jennifer Smith-Hayes – Treasurer of the scheme * Carol Chalmers – Venue Organiser for the scheme
- Three further women pleaded guilty in September 2014 to ‘promoting’ and ‘operating’ a pyramid promotional scheme under the Consumer Protection from Unfair Trading Regulations 2008. Each was sentenced to 6 months imprisonment (suspended for 2 years for Hazel Cameron) in October 2014. These sentences have been served. They were: * Mary Nash – Charts Co-ordinator of the scheme * Susan Crane – Committee Secretary and Sub Treasurer of the scheme * Hazel Cameron – Games Co-ordinator for the scheme
- Three non-committee members also pleaded guilty to ‘promoting’ a pyramid promotional scheme under the Consumer Protection from Unfair Trading Regulations 2008: Sally Phillips, Jane Smith and Rita Lomas. * Sally Phillips was sentenced in November 2012 to 3 months’ imprisonment suspended for 2 years with a 3 month curfew. * Jane Smith was sentenced in April 2013 to 4 and a half months’ imprisonment suspended for 2 years. * Rita Lomas was sentenced in May 2013 to 4 months’ imprisonment, suspended for 2 years.
- The CMA also applied the Proceeds of Crime Act 2002 to the non-committee defendants who pleaded guilty to promoting the scheme. Sally Phillips, and earlier this month, Rita Lomas, were each found by the court to have obtained a benefit from their criminal conduct, but to have no realisable assets. As a result, the judge ordered the usual nominal sum (of £1) to be confiscated. Should the financial position of either defendant change, it will be open to the CMA to apply for a fresh confiscation order against them.
- Jane Smith, was found to have benefited to the sum of £51,949 but only to have realisable assets of £20,143. As such the court issued a confiscation order which has already been paid.
- Sentence in default (see table for further details): Under POCA 2002, a sentence in default applies should a defendant fail to pay a confiscation order. The period in default varies according to the level of the amount subject to the order. If imposed, the default prison sentence does not eliminate liability to pay; the defendant must still pay the full amount of the confiscation order.
- The prosecution are entitled to apply to the court for a sum representing the costs incurred in investigating and prosecuting a case against defendants who are subsequently convicted. Whether such an order is made, and for how much, is at the discretion of the trial judge, who takes a number of factors into account. Those factors include being required to prioritise orders for confiscation under the POCA 2002, and the subsequent means of the defendant. Where a prosecution is pursued against a number of defendants, any application for costs must be calculated to ensure those costs are split proportionately. Following this principle, the applications for costs by the CMA were calculated to reflect an appropriate proportionate contribution for each defendant.
- For more information on the CMA see our homepage or follow us on Twitter @CMAgovuk and LinkedIn. Sign up to our email alerts to receive updates on consumer enforcement cases.
- Enquiries should be directed to Siobhan Allen ([email protected], 020 3738 6440).