WMI in Norway: The long road to regulatory oblivion?
Earlier this year, Wealth Masters International opened up it’s first satellite office in Oslo Norway. With an estimated 1000+ strong local member base, things seemed to be going quite well for WMI in Norway.
As 2010 progressed however things started to take a bit of a downturn and from about April the Norwegian regulators began to get involved.
Recently, BehindMLM reader ‘M_Norway’ provided some very interesting information regarding Wealth Masters International’s Norwegian activities. They detail a company in boom in early 2010 and subsequently document a gradual decline into regulatory oblivion.
Unfortunately the information provided is universally in Norwegian and from my own poking around, there seems to be very little information in English regarding WMI’s Norwegian dramas.
Today I present to you the story so far in English.
In February 2010 Wealth Masters International kicked off a world tour starting in Oslo Norway. 360+ people rocked up with approximately 150 of those new prospects to the business.
Following this WMI went on to tour Australia and then Canada.
Around March 2010 WMI opened it’s first satellite office, again in Oslo Norway. This was to service a ‘growing Scandinavian Member base‘ and was to be ‘staffed and managed by WMI Consultants and recognized financial experts throughout Norway‘.
From a business perspective, things were going well. Really well.
By April however things began to turn sour and the Norwegian Consumer Ombudsman announced that the legality of WMI’s products were under doubt. An Ombudsman spokesperson warned that
people must be very skeptical of such concepts and do not believe all the promises of riches. It has proven itself time and time again that it has not been the case.
Following this announcement from the Ombudsman, the Norwegian Gaming Board began an investigation into WMI. They released a preliminary statement in May claiming that
Among other things, lots of members’ income is derived from the sale of membership and starter kits, combined with what appears to be partially over-priced goods.
The overall impression Gaming Board is left with is that these companies (WMI and Carbon Copy Pro) operate in a gray area of the pyramid scheme definition, as defined by the provision in the Lottery Act, Section 16.
At this point in time the Gaming Board stressed however that they had not finished their analysis of WMI and that the investigation was ongoing.
While the Gaming Board’s investigation continued nothing much happened until October. In early October the Gaming Board sent WMI a list of nine enquiries it wanted WMI to provide the answers to;
1. What were the registration costs for members?
2. Details about the bonus and commission systems
3. A copy of WMI’s accounting records for sales of goods and services
4. An valuation of the products WMI offer
5. WMI’s terms and conditions for participation
6. A copy of the products sold where possible
7. Details about the Ownership / structures of WMI
8. Documentation proving that the turnover of the company is due to sale of products and not recruitment of new members
9. General information about WMI
WMI were given a three week deadline to provide the Gaming Board with the information requested.
The same week the Gaming Board sent its enquiries off to WMI, WMI had another ‘world tour’ event in Oslo aimed at recruiting new members.
At the WMI event, local Norwegian newspaper ‘E24’ got to briefly interview WMI co-founder and CEO Kip Herriage. Specifically, E24 queried Herriage about the Gaming Board classifying WMI as being in a ‘gray area’ when classifying pyramid schemes according to the Norwegian Lottery Act.
Herriage: Yes, we are in the gray area, but can you say about all companies in our (the MLM) industry.
E24: Does that not mean that there is something wrong with the whole industry ?
Herriage: No, I think not. We are a legitimate company, not a pyramid scheme.
Herriage seemed to believe that, in regards to WMI being classified as a pyramid scheme, that if it was indeed one, it was the Lottery Act and the Gaming Board that were the problem – rather then WMI itself.
Naturally all of this negative media coverage in Norway wasn’t doing much for WMI’s reputation and in an attempt to silence critics, WMI set its lawyers loose on the blogosphere.
Law firm Helleroy and Co., acting on behalf of WMI went after the author of the now defunct ‘ccpsvindel’ blogspot blog. Helleroy stated that their clients objected to the use of the terms “fraud”, “illegal” and “pyramid schemes” to describe WMI.
Helleroy went on to claim that although the use of the terms might be ‘objectively correct’, nonetheless their use to describe WMI could be illegal. If found to be illegal and Helleroy were able to show how the blog had caused economic loss for WMI, Helleroy threatened that a lawsuit would be filed seeking compensation.
Helleroy even claimed that writing negative things about WMI might constitute a ‘criminal offense’.
In response to Helleroy’s demands, the owner of ccpsvindel pulled the blog only to continue it elsewhere under the title Pharaoh’s Tomb.
As far as I can tell Helleroy’s legal threats against the owner(s) of ccpsvindel and Pharaoh’s Tomb have thus far been ignored.
Meanwhile the three week deadline imposed on WMI by the Gaming Board arrived and not surprisingly, WMI failed to deliver any answers.
In a letter sent to the Gaming Board, WMI asked for an extension to the October 27th deadline. Graciously the Gaming Board complied and a new deadline was set for the 5th of November.
Today it’s November the 11th and as far as I can tell, no details have yet emerged as to whether WMI indeed actually met this second deadline.
If they did, I imagine it won’t be too long now before the Gaming Board processed the information provided and releases a final verdict into its investigation.
If WMI missed the deadline again, well I can only imagine that getting on the bad side of Norway’s regulators is a one way street that ends in WMI being declared illegal in Norway.
Hopefully, details on whatever happened on November the 5th make their way out into the public domain soon.