Money pyramid set to beat the law at third attempt

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The Independent Online
A pyramid-style money-making scheme twice outlawed by the High Court is expected to be launched for the third time early in the new year.

Peter Reece, UK director of the organisation Titan, said he was "hopeful" that a pilot project - Titan Three - could be operating in Scotland shortly. "It will be to prove that the scheme really does work," he said.

He also confirmed that the economics professor, Patrick Minford, one of the so-called Six Wise Men who advise the Chancellor of the Exchequer, had completed a computer analysis of the Titan schemes and had concluded they were a legitimate business gamble. A copy of the report is believed to have gone to the Prime Minister's office.

The first Titan venture was banned by the High Court last year, and lost an appeal to the Court of Appeal, after the Department of Trade and Industry successfully applied to have the scheme wound down. One judge described such ventures as "pernicious".

The DTI argued that such a business, which has no product and relies on investors involving family and friends to recoup their payments, are doomed to fail.

They also claim that between them thousands of investors lost millions of pounds in the money venture - though Titan says the losses only occurred because of the DTI's legal action.

The news that Titan, which involves investors paying in up to pounds 3,000, and then receiving commission for each new investor they introduce directly or indirectly, is to start trading again will dismay those who had their fingers burnt before the court action.

One told The Independent: "It is a rip-off and I'm afraid that some people fall for it."

However, Mr Reece, who brought the idea over from Holland after it originally started in Germany, said the the notion that such a scheme was bound to fail as it ran out of investors was "absolute bullshit".

He said: "Getting a venture like this started is like flying an aeroplane. You take-off on full-throttle but then you settle down to cruise. We can prove that the market will not saturate."

The organisers have now added in an investment element, where some of the cash in invested in high-risk shares in the United States.

Mr Reece, whose organisation has already spent pounds 1.7m in legal fees, said that supporters included the backbench Conservative MP Sir Michael Grylls. Titan intended to take its case to the House of Lords and to the European Court of Justice if necessary.

Mr Reece said: "We would prefer to sit down and talk about the need for regulation, but if need be we will fight and we will win. This is a pioneering business. The DTI are going to lose this one."

However, at the end of January the new Trading Schemes Act becomes law, which will further restrict the way many network marketing systems can operate. It will also ban those schemes based solely on money-circulation which currently fall outside the scope of the Fair Trading Act.

Critics say the new act, introduced by the former minister Sir Nicholas Scott, is opaque and will effectively criminalise 300,000 people currently involved in legitimate network marketing.

Titan's lawyers say they will be seeking to make the Act non-applicable because it contravenes European Union law.

But a DTI spokesman said it was designed to protect the public from the "get rich quick schemes" which had increased in number in recent years.

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