Karatbars International are one of the pioneers of the gold recruitment MLM business model.

Under the guise of purchasing gold, Karatbars’ business model sees affiliates pay a fee and are then paid to recruit others who pay a fee.

In 2014 Canadian regulator Autorité des marchés financiers (AMF) issued a warning against Karatbars.

The warning was reinforced with legal action, which has been playing out over these past two years.

The AMF’s initial warning against Karatbars was issued on March 20th, 2014.

On April 8th the AMF sought an ex-parte injunction against Karatbars International, Robert Lariviere, Michel Desroches, Antoni Snopek and Michel Galipeau.

The AMF initially sought a ban on the promotion of Karatbars International in Canada, as well as administrative fines of $30,000 for the company and $5000 each for the named defendant affiliates.

A hearing was held on April 9th and a decision reached on April 17th.

The court rejected AMF’s claims against Michel Galipeau but granted an injunction against Karatbars and the remaining three defendants.

The decision was appealed in May, with hearing scheduled a year later around May of 2015.

Settlement negotiations continued between Karatbars and the AMF throughout 2015, which saw the hearing postponed until November, 2015.

On November 6th the AMF filed a revised complaint, which was followed up with a hearing on November 9th.

This hearing saw motions to dismiss from the defendants denied. The case continued and subsequent hearings were held on in February, 2016.

Nine months later on November 4th, 2016, the court reached a decision and ruled in favor of the AMF.

The court ordered the operation and promotion Karatbars International prohibited in Canada, as per the Financial Market Authority Act and Securities Act.

Robert Lariviere, Michel Desroches, Antoni Snopek were ordered to cease promoting Karatbars and fined $500 CAD each ($373 USD).

Karatbars International itself was fined $3000 CAD ($2242 USD).

The administrative fines were issued for promotion of the Karatbars pyramid scheme, in violation of the Canadian Securities Act.

The court found Karatbars and its affiliates were offering “investment contracts”, which it was not authorized to do so because Karatbars was not registered with the AMF.

A full copy of the Canadian court decision against Karatbars International was provided courtesy of BehindMLM reader “Daniel” (first Dropbox link in his comment).