Top Dog: Former UBP leader Wayne Furbert officially introduced YTB to Bermuda and is believed to the firms top earner on the island. He was called in to meet Fraud Unit officers, who are convinced YTB is a pyramid scam, the Bermuda Sun understands.
Fraud cops have built a dossier on Wayne Furbert's controversial travel scheme, which continues to attract members here despite being dubbed a scam in the U.S.
Experts within the Bermuda Police Service are convinced YTB (YourTravelBiz) is a pyramid scheme and would like to shut it down to prevent people losing money. Fraud detectives went as far as asking Mr. Furbert to discuss the company with them, after which they warned him that it may breach investment laws, the Bermuda Sun understands.
However, detectives have not passed a file to the Department of Public Prosecutions (DPP) because Bermuda's antiquated laws are badly equipped to deal with companies of this type. In California - where laws have been sharpened over the years to deal with ever more sophisticated marketing scams - YTB is being sued for $25m. In his lawsuit, California Attorney General Edmund G. Brown Jr. said that he intends to prove YTB is "immensely profitable to a few individuals on top and a complete rip-off for almost everyone else."
Sources with links to the DPP told the Bermuda Sun that fraud experts on the island are in full agreement with the AG in California. However, past attempts at prosecuting pyramid schemes have stalled because Bermuda only has generic laws in relation to fraud. Former UBP leader Wayne Furbert believes that around 700 people - more than one per cent of the island's population - have paid at least $500 each to join YTB since February, when he imported the scheme from the U.S. However, anecdotal evidence suggests that the total membership could be far higher, with existing members recruiting new investors by the day.
Several successful members have told this newspaper that they have made thousands of dollars from YTB, and Mr. Furbert himself is believed to be earning between $100,000 and $500,000 from the scheme per year. However, Mr. Furbert admits that a large proportion of members have never earned any of their investment back, largely because they have made no efforts to recruit new members.
One legal source, who has links to the DPP said: "A file has been on the fraud unit's desk twice. We know they've looked at it, and continue to look at it, but it's a question of getting a prosecution. There's no doubt that this is a pyramid scheme, but the chances of getting a prosecution here are close to nil. In California, and elsewhere in the States, they tailor legislation for exactly this kind of situation. In Bermuda, our laws are more broad-ranging, so not much can be done."
In a separate development, the Office of the Attorney General in California warned Bermudians not to get involved in YTB. A spokesman said: "This office does not undertake lawsuits lightly. Every action follows a thorough and complete investigation of the evidence. We hope that Bermudians will take note of what is happening here and will protect themselves from this kind of aggressive marketing."
People who join YTB pay $500 upfront and then $49.99 per month, for which they receive access to their own travel website. Members receive commission payments every time they book vacations through their site - either for themselves, or for family or other customers. They also receive commission for every new member they persuade to sign up, plus a cut of the commission earned by the new member underneath them. Critics claim it is a pyramid scheme because few members earn any money from travel bookings, and only a tiny fraction earn enough from travel bookings to cover their initial investment.
At glitzy recruitment conferences in Florida and elsewhere in the States, the firm's founders claim that anyone can take their place among the top earners so long as they work hard. Members in Bermuda have told the Bermuda Sun the same thing: that those who lose money have not put in enough effort.
In an official press statement last night, the police said: "The Bermuda Police Service is aware of YTB and at the request of the Fraud Unit, Mr. Furbert met with detectives in order to discuss the travel business.
"Based on the examination of the information available at the time, the fact that no member of the public had made a complaint and advice obtained, it was deemed that no further action would be taken by the Police."
The Bermuda Sun was in contact with Mr. Furbert yesterday but he declined to comment on developments.