How to get away with running a pyramid scheme: from Galvagin to Lyoness
Recently, there has been some confusion about whether Hubert Freidl, alleged CEO of Lyoness, is in fact the main responsible for the company. Documentation from the Swiss Chamber of Commerce and legal proceedings between Helmut Rucker and Hubert Freidl (co-owners of Galvagin) show that Freidl was in fact not one of the founders of Lyoness Holding Europe AG (now: LYONESS EUROPE AG), but that tax/liquidation professionals had founded the company. These professionals were Iwan J. Ackermann from Liechtenstein (registrar of several companies in Panama, the USA, etc.), Max Meienberg and Uwe Proch.
As most of the readers of this blog will be aware of, Lyoness is not the first pyramid scheme instigated by Austrian 'super businessman' Freidl. In fact, Freidl has been known to pull off the same scam at least twice earlier through Erin Trade SA (which operated the GTS system) and Galvagin. Both these systems operated nearly identical to that of Lyoness now - business partners (i.e. premium members/loyalty merchants) were persuaded to purchase expensive business packages through which they would gain the right to give away incredible discount cards, with which amazing discounts could be gained at a variety of high-end retailers, and make money over any new business member they would enrol.
Lyoness has successfully managed to remove most of the incriminating evidence about Erin Trade/GTS and Galvagin from the internet (as it could severely impede the growth of the latest version of the scam), yet, when investigated thoroughly, some traces can still be found.
Most people who have had a closer look at Lyoness suspect, believe and/or know that Lyoness is nothing more than a continuation of the pyramid scheme constituted in the 1990s, first as GTS and later as Galvagin. However, similarly, nearly everyone who has investigated Freidl and Lyoness, knows that it is incredibly tough to weed through all the corporations and people involved.
Therefore, up until now, everyone had to pretty much guess how Freidl and his accomplices had managed to dupe so many people with their pyramid scams, move the cash out of the corporations and start over with a clean slate. It will not surprise anyone that in order to pull off such stunts, quite some people, corporations and money have to be involved. All around the globe, there are experts in tax and bankruptcy law interested in assisting people dealing with these issues (as it can be big business). And through its directors and their former occupations, Lyoness is tied to many of those.
As you may know, Galvagin Holding Ltd. was allegedly operating from the European continent, yet had its official corporate headquarters in London. Before the change of the century, the company was registered as Leaders 2000 Investments Ltd., most probably a reference to the upcoming millennium change. In the beginning of the 2000s, the company changed its name to Galvagin and started to list Rucker and Freidl as its directors.
One of the first things one notices when looking in to Galvagin, is that it was located on the same address (788-790 Finchley Road) as 776 other companies and 55,548 people. Considering the size of the property located on this address, one can confidently assume that this is a mail forwarding address. Another thing that meets the eye is that, next to Freidl and Rucker, no people are tied to the company, but that the other people on the board are called 'Centrum Secretaries Ltd.', 'Company Directors Limited' and 'Temple Secretaries Limited'. When checking out these serves - particularly the latter two - one may find that they are tight to Mrs. Barbara Kahan, director of (amongst 16,942 other companies) Company Directors Ltd., and not quite irreproachable. She 'lives' on 2 Woodberry Grove in the Winnington House in North Finchley, London, together with 8,093 roommates and 11,172 companies.
Most probably, Mrs. Kahan is involved in the trading of (empty) corporations, and providing these corporations with fancy sounding corporate headquarters addresses in London, telephone call and mail handling and as many secretaries and directors as requested.
Not surprisingly, Mrs. Kahan and her associates did not just do this for Freidl and Rucker, but for an incredible amount of other (probably mostly good-natured) individuals and foreign companies. However, the services of people like Mrs. Kahan are incredibly handy when one is trying to commit bankruptcy fraud.
While in the last operating years of Galvagin, the business members (i.e. victims) of this company had to arrange everything with its Spanish subsidiary - Galvagin Espana SL - Compumax Limited, a company founded about half a year before Galvagin (Leaders 2000) was founded in December 2012, persisted. This company was founded and governed by 'Company Directors Limited' (indeed, Mrs. Kahan) and (later) Lyoness co-founders Max Meienberg and Uwe Proch.
As soon as Freidl had formally resigned from his director position at Galvagin and Galvagin had filed for liquidation (leaving all the responsibilities to its Spanish subsidiary), he was 'hired' by Lyoness Holding Europe to be a director of the company and 'to expand the companies customer base'. However, it seems more like the tax and liquidation experts were giving him a clean company back to start over with.
When the liquidation of Galvagin was completed, Freidl could then again be presented as a 'super businessman' and CEO of Lyoness (although on paper, he was and is not) - Galvagin continues and manages to dupe an additional 2.7 million people out of considerable sums of money.
It should be noted that Mr. Meienberg started 'Elation Trading Limited' in 2003 (the year in which Lyoness was founded), through a similar system as Compumax Limited (which is now dissolved).