Norway Gaming Board say WMI an illegal pyramid scheme
The Gaming Board’s decision comes after nearly two months of investigation into WMI and the conclusion that WMI is in breach of section 16 of the Norwegian Lottery Act, (also I believe known as the ‘Gaming Act’).
Section 16 of the Lottery Act states
It is prohibited to establish or participate in pyramid systems, luck chains, chain transactions or similar enterprises where money or other values are ultimately traded among an indeterminate circle of people.
Wealth Masters International was found to be in breach of the act after the Gaming Board established a set of four criteria to assess WMI on. Last month the Gaming Board sent a series of questions off to WMI to better understand the business. Upon receiving the answers to these questions, the Gaming Board applied them to the criteria they had already established.
In doing so the Gaming Board found that
1. Revenues in WMI primarily come from the recruitment of members, not the sale of products.
2. One must give consideration to achieve revenues in the WMI.
3. The cost to be a member of WMI and to purchase WMI’s products are clearly overpriced.
4. WMI has a pyramid-like trading system.
Criteria one comes from the Gaming Boards closer inspection of where the revenue eventuates from the majority of WMI members based in Norway.
Upon inspection, for the Gaming Board to word their findings with such certainty, I can only assume means that the majority of WMI members are generating revenue via direct recruitment rather than from retail sales of the WMI product line.
Criteria two I don’t entirely understand. I think it’s referring to the lack of consideration about the effort required to run a WMI business as presented to potential recruits.
I’m not entirely sure though and I’m putting the vagueness of the point down to inaccurate translation from the original E24 article.
Criteria three is a direct assessment of the monetary value placed on WMI’s products and membership by the Gaming Board. Obviously open to interpretation I imagine the Gaming Board weighed up WMI’s membership and product line with similar services to gain an accurate reflection of what was overpriced or not in the industry.
Finally criteria four refers I believe to the marketing system and how WMI is marketed. As a quick Google search will reveal, WMI’s internet marketing presence is heavily geared towards the business opportunity rather then WMI’s products themselves.
Currently the Norwegian Gaming Board are warning that
WMI is thus required to cease operations in Norway. The same applies WMIs members.
It would be illegal to create, operate, participate in or propagate pyramid schemes or similar system.
Unless the sale of products WMIs stops in Norway, it could lead to penalties or fines.
In response to the notification of a decision by the Norwegian Gaming Board, CEO of Wealth Masters International Scandanavia Carl Harald Krystad, has stated that ‘they do not intend to go down without a fight‘.
Krystad went on to say that ‘he believes that the Gaming Board is wrong when they conclude WMI is a pyramid operation‘.
WMI provides services in training and development, and therefore it is difficult to assess the price of the expertise they sell.
In our opinion, this is not a pyramid.
I’m on my way to our lawyers with the report now. There are many factors here that we do not agree with the Gaming Board, including the commission system. We believe they have misinterpreted the whole business.
Given that WMI were required to provide the Gaming Board directly with information as requested, it would seem odd that WMI are now claiming the Gaming Board have misinterpreted the provided information.
As it stands now, from the sounds of it WMI are almost guaranteed to launch an appeal against the decision. Alternatively, Wealth Masters have three weeks to respond to today’s notification by the Gaming Board without an appeal.
This would mean ceasing all operations and business in Norway which I believe is unlikely.
More probable and in the best interest of the business is the launch of an appeal relying heavily on the announcement of WMI’s two new business subsidiaries. Set to launch in 2011, Opes Partners and WMI Nutrition could be construed as a direct attempt to introduce viable retail streams into the WMI business opportunity.
Whether this is enough to convince the Gaming Board however is another matter.
The full letter from the Gaming Board to WMI’s lawyers, Helleroy and Co. in Norwegian is available here.
The PDF has been uploaded as an image so I’ve been unable to translate the document into English thus far myself. I have however been informed a reader is working on a translation and I’ve also contacted the Gaming Board directly requesting an English translation for analysis.
Stay tuned for more news as it develops.