The Lyoness Myths #5: Lyoness has never lost a court case

The Lyoness myths section was developed to assess the validity of the arguments used by Lyoness instigators and adherents to 'prove' that Lyoness provides a viable business opportunity. It should provide people considering to become a Lyoness member with a more balanced view of the 'overwhelming' sales pitch of the Lyoness racketeers, as well as show people defrauded by Lyoness how exactly they were deceived and lured into Freidl's web of lies.

Today's myth is one of the main arguments used by Lyoness propagators to convince casual observers, and mainly doubting prospects, that Lyoness is a legitimate company operating a sustainable shopping community.

Lyoness propagators obviously claim that Lyoness is in no way illegal. To support this claim, they have used a variety of arguments. Usually, the first argument is that legal experts have thoroughly investigated the Lyoness business model and compared it to the national legislation of the country it was entering. However, when requested, the criteria and outcomes remain unknown, as well as the identity of the 'legal experts' who would have performed this investigation. Then, the irrelevant certificates are brought to the table. Also, nonsense arguments like 'Lyoness is registered at the Chamber of Commerce' are abused to 'prove' Lyoness' legitimacy.

One of the most beautiful arguments ever heard, though, is the argument that Lyoness cannot possibly be illegal, as it has never lost a court case. The flawed logic behind this argument, squirted into the heads of the deluded Lyoness participants, is that if a company or business concept has not been explicitly forbidden by a court, it is irrefutably legal.

This argumentation is of course complete nonsense, and anyone familiar with basic law principles and/or capable to apply common sense to this argument is aware that this is just an attempt to cover up the undoubtedly illegal activities that Lyoness performs.

However, next to merely being irrelevant and frustratingly unreasonable, this argument also constitutes a blatant lie. At a time where nearly any relevant Austrian agency is investigation or prosecuting Lyoness, the argument that the court has not explicitly forbidden Lyoness yet, holds. Of course, this does not make Lyoness legal in any sense - the proceedings have just not been completed yet.

Like with any pyramid scheme, there are (and will be) many victims of Lyoness suing the company for the damages they have sufferend, demanding retribution. Such civil law cases would essentially revolve around exactly the same question that will be posed by the Austrian authorities in their criminal law cases against Lyoness: 'is Lyoness operating an illegal pyramid scheme'?

The main difference is, however, that unlike in criminal law cases, the court in a civil law case cannot forbid Lyoness. If the court were to decide that Lyoness is in fact operating an illegal pyramid scheme (which it is), this would have as only consequence that Lyoness will be forced to reinstate the plaintiff(s) for the suffered damages. Neverthess, the qualification criteria would not be any different, it would be the same (or similar) judges taking the decision, based on exactly the same laws and regulations. In other words, if the civil courts force Lyoness to reinstate its victims, it qualifies Lyoness as an illegal pyramid scheme under the Austrian law.

Unfortunately, this has not happened yet (but hopefully it will soon). Nevertheless, the same principe applies for the legal question whether Lyoness had the right to create and offer investment schemes to the public without having received a license, having notified the appropriate authorities or having created a prospectus. The Austrian commercial district court of Vienna has decided on several occasions (1, 2) that Lyoness had no right to peddle its advertising campaign Ponzi scheme without providing the investors with a decent prospectus. By neglecting to do so, Lyoness has provided its investors with the opportunity to withdraw their investments from this scheme without requiring the consent of Lyoness. The same goes for the option-based Ponzi scheme entitled 'Premium Ranking Europe'.

In other words, everyone who has invested in the Ponzi constructions: 'advertising campaigns' and 'Premium Ranking Europe' can demand their money back. And, based on this, it can be concluded that Lyoness has violated the capital markets regulations of Austria by not issuing a prospectus for the investments it peddled.

Momentarily, Eric Breiteneder (Austrian lawyer specialised in investment and consumer law), functions as a legal respresentative in 20 other (pending) court cases, representing approximately 220 plaintiffs. In 2012, three out of eleven lawsuits were won by the investors. The other cases are mostly still pending. Also, Breiteneder has managed to settle the cases of about 20 investors, without going to court. Contrary to the investors going to court, the settlers received about 75% of their investment back (vs. 100% for those going to court).

The Viennese commercial district court mentioned in its ruling against the Lyoness' advertisement campaigns Ponzi scheme that:

"The success of the 'Lyoness system' depends on the number of newly-recruited customers[.]"

If the courts stick to this observation, it can never take long before Lyoness is convicted for running a pyramid scheme too.

No comments:

Post a Comment