Australian Competition and Consumer Commission v Golden Sphere International Inc

The Australian Competition and Consumer Commission (ACCC) filed a lawsuit against Golden Sphere International Inc. and two other respondents, Golden Sphere International Pty Ltd and Golden Sphere International Ltd, to address the promotion and operation of a pyramid scheme known as the Golden Sphere scheme. This scheme was deemed to contravene section 61(2A) of the Australian Competition and Consumer Act. The ACCC sought various injunctive reliefs, establishment of a fund for group members, and financial penalties to deter future unlawful conduct.

The legal issues the court had to address included whether the Golden Sphere scheme constituted a pyramid scheme under the Act, the extent of liability of the respondents for promoting or being involved in the scheme, and the appropriate form and amount of relief and compensation for the affected group members. The court needed to determine if the injunctions were necessary to prevent further unlawful conduct and if the monetary penalties and fund establishment were appropriate to compensate the victims and deter future activities.

The court concluded that the Golden Sphere scheme did indeed constitute a pyramid scheme, as it encouraged participants to earn primarily from recruiting new members rather than from legitimate business activities. The respondents were found to be liable for promoting and being involved in the scheme. The court granted the injunctions to prevent the respondents from continuing or promoting the Golden Sphere scheme or similar schemes. It established a fund to compensate the group members and appointed a trustee to administer the fund. The court also ordered the respondents to jointly and severally pay a penalty of $550,000 into the fund. Additionally, the court directed that specific entities identified in the orders hold any relevant monies and pay them into the fund as a partial satisfaction of the respondents' obligations. The court further outlined the procedures for distributing the fund to eligible group members and managing any surplus.

The final orders included detailed provisions for establishing and administering the fund, notifying group members of their rights and the claim process, setting priorities for payment from the fund, and handling any surplus funds. The court also mandated that the respondents pay the ACCC's costs for the proceedings.