“Pyramid” scheme fraud trial begins
The trial has got underway in Berne of 12 Swiss and an Italian for their role in the European Kings Club "pyramid" scheme. Five years ago it collapsed, defrauding 94,000 investors in Switzerland, Germany and Austria of SFr600 million ($360 million).
The 13 men are accused of fraud, with some facing additional charges of violating Swiss banking law and membership of a criminal organisation, court official, Peter Alex Mueller, said.
Prosecutors said the 13 were low-ranking figures in the scheme’s Berne branch, and that they had helped to con more than 1,500 investors out of SFr17.5 million in canton Berne. Their bosses were jailed for fraud in 1997.
Swiss investigators, who have led inquiries into the scheme in 12 cantons, believe that as many as 30,000 people in Switzerland have been defrauded of between SFr200 million and SFr300 million.
The Kings Club was founded in Germany in 1991 and set out to exploit fears about giving up the Deutschmark for the euro, by offering staggering annual returns of up to 72 per cent. As more investors were drawn by the high rates of interest, the scheme snowballed, spreading to Switzerland a year later.
Kings Club representatives sold investment certificates for SFr1,400 with the promise they would be worth SFr2,400 within a year. But investors were only granted the privilege to “join the club” on condition they signed up 15 new members within a month.
Pyramid schemes rely on existing investors to recruit new members to finance high yields with their initial outlay. The Kings Club collapsed in late 1995, when it failed to find enough new recruits to finance the returns of those higher up the pyramid.
Berne’s Economic Criminal Court will try the 13 defendants in two stages. The Italian and six Swiss appear in court on Wednesday with the verdict expected on August 15. The others go on trial a week later and the verdict is scheduled for August 29.
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