A pyramid selling scheme that has been spreading through the Asian community with the lure of near-instant wealth has been halted by legal action.
"High-pressure" sales tactics were employed by the OMI Club and VIP Club to coax hundreds of people to sign up for a get-rich-quick project at presentations at four-star London hotels.
In return for a joining fee of £1,695, members were reputedly able to obtain discounts on holidays at luxury resorts such as Richard Branson's Necker Island. But they were told after hours of intense sales spiel that the real path to wealth lay in signing up friends and family to the scheme.
Yesterday the Office of Fair Trading obtained an interim High Court injunction against a businessman, Gurdeep Singh, for his involvement in VIP Club for allegedly breaking laws on advertising, lotteries and consumer protection. The OFT estimated the scheme may have collected as much as £17m from recruits.
The OFT described the organisation as a "pyramid selling scheme" and said Mr Singh had previously given undertakings to the OFT about a similar business he ran called OMI Club. The watchdog claimed that he had breached or was likely to breach those undertakings at VIP Club.
According to footage shot by an undercover reporter from BBC's Watchdog in October, recruits were enticed into VIP Club with suggestions they could be enjoying a luxurious lifestyle at top foreign resorts. One organiser told an undercover reporter he could become a millionaire.
A psychologist who analysed the BBC's footage, Geoff Beattie, said the methods used by the club such as reward and applause focused on "positive conditioning". "It reminds you of what happens in evangelical situations and also some cult situations," he said.
Members were told their potential earnings were up to £99,900 in just 10 months. The OFT said: "Potential recruits are invited to attend high-pressure sales presentations that can last six hours, and are held in glamorous hotels across the country.
"In the case of OMI, complainants allege that considerable pressure was placed on attendees to become members and pay the membership fee within a very short space of time.
"It was claimed during a VIP presentation that there was a growing UK membership base of around 10,000 people, which would mean that a total of around £17m has been paid into the scheme by new members."
The OFT worked with trading standards and the Department of Trade and Industry to collect evidence for the case. Officials are investigating the involvement of other people in both schemes.
Mr Singh failed to respond to The Independent's inquiries about VIP Club. However in an e-mail to the BBC last month he denied any wrongdoing. "This is not a pyramid scheme, respected legal advice has been sought and is ongoing," he wrote.Reuse content