Did you pay real money to Lifewealth8, a ‘digital marketing company’, for ‘an outstanding life enrichment opportunity via the Internet’ that includes a simulated stock market and simulated shares?
A Sydney couple who refused to play nominated it for our ‘Pie In The Sky’ (PITS) award and it won our 2004 award for the most outrageous financial scheme of the past 12 months.
‘They went to great lengths to make the stock look interesting and attractive, but it looked just like a pyramid scheme in fancy-dress’, was how the nominating couple described the scheme.
Unfortunately, Lifewealth8’s simulated stock market isn’t all that’s simulated. One Australian player tried to cash out her gains, but Lifewealth8 made all sorts of excuses and did not pay up. Even the company’s basic registration details are ‘simulated’ or maybe just plain fake.
This scheme, when first nominated for our awards in 2003, claimed to be incorporated in Malta. The Maltese authorities informed ASIC that no such company was registered there. Today, Lifewealth8 claims to be registered as a company Wealth 8 Limited in the British Virgin Islands. The British Virgin Islands authorities have informed ASIC that no such company is registered there*.
By the way, the company president and founder claimed to hold an accountancy degree from Malta. The Maltese authorities also told us the local university had no record of giving an accountancy degree to the person concerned. Today, the president and founder does not tell us where he gained his accountancy degree.
‘Stock market games played with real money offer you none of the legal protections of genuine markets’, ASIC Executive Director of Consumer Protection, said.
‘If you want to invest, stick to the real thing where you can easily check company details, and get the protection of dealing through licensed markets and licensed financial services businesses’, our Director said.
‘Furthermore, because it’s a game and based overseas, it falls outside ASIC’s legal coverage.
‘It bears all the hallmarks of a pyramid scheme, based around incentive payments for getting other people to play. ASIC issued a warning to the public in March 2003 when we received complaints that Lifewealth8 was recruiting members in Australia.
‘Its nomination for a Pie in the Sky Award was one of the ways in which this first came to our attention’, he said.
‘The serious purpose behind these ‘PITS Awards’ is to warn the public. Financial scams still devastate far too many people. Scams frequently use sophisticated props and hard sell techniques that trap even financially experienced people.
‘After a period of low returns from genuine investments, consumers need to double their guard against scams and get-rich-quick schemes’, he said.
‘A common feature of all this and our runner up schemes is that they are all unlicensed offshore operations with the real prospect of losing your money and very little that can be done to get it back’, he said.
‘The message is that you should only deal with licensed Australian businesses, because that way,your rights are protected if something goes wrong. Investors who choose to deal with unlicensed overseas businesses, lose the protections afforded by the licensing regime. You can check ASIC’ investor and consumer website for free to make sure a business is licensed’, our Director said.