Update: Austria knew in 2005 - Mafia practices started early

The suppression of the free press, free speech and the truth being spread about the irrefutably fraudulous nature of their 'company' was apparently an important part of the founding statutes of 'Lyoness'.

Earlier today, this blog reported that government officials, regulators, prosecutors and politicians in Austria knew about early pyramid scheme allegations against Lyoness - yet failed to investigate the claims and did not remember the allegations when the company grew bigger. Not only were serious reports filed against Lyoness already in 2004 - the Austrian criminal police (Kriminalpolizei) wrote a three page article on the resurfacing of disguised Ponzi schemes and pyramid schemes in Austria. The authors of this article openly described Lyoness as such a case of a disguised pyramid scheme, hidden behind the banal facade of an effectively valueless and redundant 'shopping community'.

This was in the end of 2004. Yet, as mentioned, nothing was done by government regulators and prosecutors until much later. The obvious story was also not picked up by politicians and - at that point - not by journalists either. The Lyoness Complaint Centre finds this remarkable, considering that the criminal police dared to publicly out Lyoness as the pyramid scheme it is - and the police is not going to risk its image by making such allegations without having the proof.

Lyoness, however, did feel the need to respond to the allegations made by the criminal police, probably because the instigators saw the large foot circulating above their heads. Apparently, at that time, Lyoness offered 70% discounts on the goods that were sold by their 'loyalty merchants'. Just like the other points of rebuttal and dispute brought to the table by Lyoness, the 70% arguments was irrelevant as it concerned the redundant facade only used to hide the absolutely devious intentions of the Lyoness instigators. Ironically, this was their counter-argument to the allegation that Lyoness operates a pyramid scheme (or, as the Germans and Austrians say: a 'snow ball system'):

"The assertion that the Lyoness shopping community fulfills the requirements to receive penalties for violating article 168a of the Austrian Penal Code on pyramid schemes is untrue. The Lyoness shopping community is a legitimate shopping system, which does not violate any element of article 168a of the Penal Code."

Strong comeback. Whereas all other - irrelevant - 'untruths' from the article were fought into excruciating detail, Lyoness does not list any single argument to fight off the most important allegation, and basically just admits defeat in the obvious fact that it is a pyramid scheme. At that time, probably even Hubert Freidl did not believe that his scam would continue for much longer.

However, this opportunity was granted to him by the Austrian Ministry of Justice refusing to investigate this obvious case, let alone prosecute Lyoness. The media and political silence that was then formed, allowed him to expand his company both in Austria, as well as all around the world - resulting in an estimated 2.7 million victims so far, from at least 40 countries, on all continents and with estimated damages of billions of euros.

This blog has also reported recently that Lyoness is - to say the least - not very fond of, let's say, constructive criticism. In fact, everyone who dares to expose the company for the fraud that it is, gets confronted with copyright infringement allegations and/or even law suits worth millions of euros. It was also reported that internal Lyoness memos have shown that the Lyoness instigators have offered rewards up to CHF 45000 for tips leading to the true identity of former Lyoness adherents (i.e. victims) now publicly blowing the whistle on Lyoness. Lyoness also persuaded the Austrian public broadcaster ORF and Google-daughter Youtube to take down videos that did not please them, by filing ridiculous and inappropriate copyright claims.

Apparently, more or less the same tactics were applied by Lyoness here. Although Lyoness' rebuttal is luckily still circulating on several public forums, the original article written by the Austrian criminal police clearly stating (in December 2004, can't stress that enough) that according to their evidence-based and common-sense analysis of Lyoness it was an illegal pyramid scheme violating the Austrian Penal Code, has disappeared from the website of the criminal police. The entire issue is still uploaded there, with separate links to the separate articles featured in that copy - yet the pyramid scheme/Lyoness article is nowhere to be found.

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