Would-be scammer convicted after running one of biggest pyramid schemes in NZ

A pyramid scheme promoter who says she was going to “make history as one of the biggest scammers in New Zealand” has been convicted on five charges laid by the Commerce Commission under the Fair Trading Act.

Wednesday, April 24th 2024, 6:00AM

by Sally Lindsay

Shelly Cullen was the lead promoter of Lion’s Share, one of the biggest pyramid schemes ever seen in New Zealand, which ensnared about 150,000 people worldwide who lost a total of nearly NZ$17 million.

Fair Trading general manager, Vanessa Horne, says the successful prosecution of Cullen highlights a brazen disregard for potentially vulnerable consumers.

Despite the convictions, the commission says Cullen is also involved in promoting with others a new scheme known as MaVie, circulating on-line within New Zealand.

Cullen promoted the global Lion’s Share cryptocurrency-based scheme to Māori and Pasifika communities during 2020 and 2021.

Horne says pyramid schemes are evolving with the use of social media and cryptocurrencies and can often give the appearance of legitimate revenue generating opportunities.

"This case was a particular focus of the commission as 83% of participants lost money from the global scheme, with the total lost worldwide estimated to be almost $17 million - but it also highlights a much broader risk for Kiwi consumers," Horne says.

“We take pyramid scheme cases seriously because of the harm they can cause in communities. People are often misled about the financial benefits of membership and the level of risk. When these schemes collapse, the impacts on most of those involved and their families can be devastating”.

The commission taking steps to reach people who may be tempted by the new MaVie scheme, urging them to exercise caution, and is reaching out to platforms – particularly Meta. It is concerned about the nature of some schemes being promoted.

“As Cullen has been promoting MaVie, we are urging communities to exercise caution around this and all similar schemes. We think this is particularly important following the court's finding that Lion's Share was a pyramid scheme, and Cullen's conviction for the promotion of that scheme," Horne says.

Following enquiries into MaVie, the commission has started sending out compliance advice letters to those the commission considers have likely promoted the scheme.

The letters spell out the risks of participating in and promoting possible pyramid schemes which may give rise to a breach of the Fair Trading Act.

"It is important all New Zealanders are fully informed and aware of the risks when considering similar opportunities that are promoted to them,” Horne says.

Pyramid schemes are illegal in New Zealand under the Fair Trading Act. She says some people may not recognise the features that define these schemes – so we’re reaching out directly to help get the warning to as many people as possible.

Pyramid schemes usually involve buying a membership or making an upfront payment into schemes that are frequently promoted as “investment opportunities”.

These schemes are primarily an opportunity to recruit new members rather than to buy or sell goods or services to make money.

Cullen was convicted in the North Shore District Court, and a sentencing date has yet to be confirmed.

The commission’s website includes a fact sheet to help people spot a pyramid scheme, as well as general information about scams. Those who promote pyramid schemes, including to their family and friends, run the risk of criminal convictions and substantial fines under the Fair Trading Act.

Tags: scam