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Net Guard Shuts Up Shop Following Investigation

Issued 5 July 2002

Net Guard Shuts Up Shop Following Commission Investigation

Auckland based Net Guard (New Zealand) Limited has closed down following a Commerce Commission investigation. The Commission had received complaints that Net Guard was operating a sophisticated pyramid scheme in breach of section 24 of the Fair Trading Act.

Net Guard, formerly known as World4Vision, described itself on its website as a “technology driven international membership organisation focused on becoming a market leader in the design and development of wireless Internet-enabled tracking and location systems.”

The Commission began investigating Net Guard last month after receiving more than 30 complaints and enquiries about the business.

“The Commission had strong concerns about the activities of Net Guard, and considered that it showed the hallmarks of a pyramid scheme,” said Commission Chair John Belgrave. “Two of the people who set the scheme up in New Zealand, Malcolm Stockdale and Stuart Baldwin, were associated with Alpha Club, an alleged pyramid scheme the Commission is current taking civil action against.”

“The Commission executed a number of search warrants last week with a view to seeking a court injunction to stop the company from trading. It found that more than 60 people had joined Net Guard and that the business had already generated up to half a million dollars in membership fees.”
“The Commission received information following a Net Guard meeting on Wednesday night (3 July) that those involved in the management of the company had resigned with immediate effect and that the company was suspending operations in New Zealand. In addition, no further membership meetings have been planned.”

Net Guard was conducting presentations at various hotels throughout the Auckland region. Admission to the presentations was available only by invitation from ‘agents’ of the company. Invited guests were introduced to a scheme where they could earn income by becoming sales agents of security systems and through commissions paid for recruiting new members. Guests who were interested in becoming ‘agents’ for Net Guard were required to pay a $6,800 membership fee. Upon recruiting another person, they become a ‘sales agent’ and received a commission of $1,200. Income at any level could only be gained by the recruitment of new agents.

The majority of complaints to the Commission included allegations that Net Guard had not supplied the security products new agents expected to receive on joining and concerns that it may have been a pyramid scheme. Mr Belgrave said the Commission’s investigation would continue and enquiries were still being made.

Malcolm Stockdale and Stuart Baldwin left New Zealand last month. The Commission received information that Stockdale and Baldwin have been attempting to set up the scheme in Australia, and that one of the principals had now left for South Africa. The Commission has alerted the relevant enforcement agencies in Australia and South Africa.

“The Commission warns people to be careful if they are approached to join schemes where there are promises made about future earnings and that require people to recruit members to obtain those earnings,” added Mr Belgrave.

Net Guard Members are encouraged to contact the Commerce Commission with any relevant information regarding Net Guard on 0800 943 600 during office hours.

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