File for DPP on pyramid sales scheme

A Garda file has been prepared for the DPP on a pyramid selling scheme run from Germany.

A Garda file has been prepared for the DPP on a pyramid selling scheme run from Germany.

The "Liberty Chart System" came to Ireland last year, starting in west Cork and has since spread to Cork city, Clare, Limerick and Kerry.

Gardaí estimate up to €12 million has been invested in the scheme which they now predict is facing collapse. They fear violent confrontations over the next few months amid reports that already there have been signs of tension at meetings to promote the scheme in Co Cork.

Last Friday an estimated 250 people attended a pyramid scheme meeting in Skibbereen, west Cork.

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The following day a number of investors expressed dismay after a rumour spread that the people on the top of the pyramid scheme were family and close friends of the organisers and they would receive their cash first.

Yesterday, an Irish investment firm, Liberty AM, said in a statement that it has no connection or involvement with the "Liberty Chart System".

The scheme actively encourages participants to recruit others known to them. Investors require at least €5,000 to take part and are promised an eight-fold return on their investments.

They must also introduce two other parties to the scheme. Sixty people in Cork alone were being monitored by gardaí in January amid reports they were planning to travel to Munich to hand over their investment cash to the organisers of the fund.

The money raised in Ireland is expected to be invested in a rolling European fund - which backers claimed could deliver returns of between 100 and 400 per cent. Cash is understood to be headed to Germany from Ireland, England, France and Spain.

The logic of a pyramid scheme is simple: as long as more people throw their money in, a select few will get out with enormous returns.

These lucky ones will obviously vouch for the "miracle" of a scheme which produces money as if by magic.

Their enthusiasm is infectious and others hoping to get rich quick begin to throw money at the scheme. However, at some point the schemes get too big, the promoter cannot raise enough money from new investors to pay earlier investors, and many people lose their money.

If the DPP decides the "Liberty Chart System" contravenes the Pyramid Selling Act 1980, prosecutions of those involved in canvassing others to sign up may follow, which could mean a fine of up to €12,700 and/or two years in jail.