Court finds Internet Kiosk provider guilty of deceit

The Federal court has declared Daniel Albert, Managing Director of Photo safe, Data Vault and ie Networks, all of which are in liquidation, guilty of deceiving 37 small businesses in a series of scams which offered prospective franchisees high returns that never materialised.

The court also found Greg Zimbulis, sales manager of Photo Safe and Data Vault, to be engaged in similar conduct in breach of the Trade Practices Act 1974.

The declarations were made following legal action initiated by the Australian Competition and Consumer Commission (ACCC) in April last year. In October last year, Australian Securities and Investment Commission (ASIC) also found Albert in breach of the Corporations Act (See story: http://www.computerworld.com.au/index.php?id=202178587).

While the ACCC sought broad injunctions to prevent Albert and Zimbulis from engaging in similar conduct in the future, these orders were not granted by the Federal Court. However, the court ordered that Albert and Zimbulis undergo trade practices compliance training and pay a contribution to the ACCC's costs.

The ACCC estimates that the three separate business scams collectively netted more than $3 million. The three so-called business opportunities were: Photo Safe, which claimed to provide a service that saved customers' photographs to a compact disc and to an online album on the internet; Data Vault, which was set up to market a software product that stored computer files and emails at a secure, remote location; and ie Networks, which was touted to provide coin-operated internet access terminals and mobile phone content download terminals in shopping centres and other popular locations.

Franchisees that signed up as Photo Safe or Data Vault distributors for amounts of up to $160,000 or paid ie Networks for internet terminals made small returns or no returns at all.

Albert admitted that he misled and deceived Photo Safe and Data Vault small business investors by claiming that there were existing and potential markets for the Photo Safe service and the Data Vault products. Significant amounts would be spent by franchisors on marketing and advertising, and major national traders including Australia Post, Harvey Norman and members of the Australian Newsagents Federation, had agreed to offer the Photo Safe service to the public.

He claimed that major national traders, including Dick Smith Electronics, Tandy Electronics, Officeworks, Harvey Norman and members of the Australian Newsagents Federation, had agreed to offer the Data Vault product to the public.

Albert also said he could secure the franchisees a number of retail outlets as customers for each distributor, that high incomes would be generated by distributors who took up a distributorship, and the products and services offered by the companies would be launched in the market on a particular date.

None of these promises materialised.

"Small business investments and franchises have the potential to attract unscrupulous operators," ACCC Chairman, Graeme Samuel, said in a media statement. "This makes it a priority area for ACCC enforcement. Operators who make false claims about the profitability of small business opportunities risk getting sued by the ACCC.

"In this case, Mr Albert and Mr Zimbulis were not able to avoid action by the ACCC by hiding behind the liquidation of their companies. This reinforces the ACCC's commitment to pursue corporate executives and senior sales staff who are responsible for misleading or deceiving small business investors."

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Jack Jeffries

MSI GS75

As the Maserati or BMW of laptops, it would fit perfectly in the hands of a professional needing firepower under the hood, sophistication and class on the surface, and gaming prowess (sports mode if you will) in between.

Taylor Carr

MSI PS63

The MSI PS63 is an amazing laptop and I would definitely consider buying one in the future.

Christopher Low

Brother RJ-4230B

This small mobile printer is exactly what I need for invoicing and other jobs such as sending fellow tradesman details or step-by-step instructions that I can easily print off from my phone or the Web.

Aysha Strobbe

Microsoft Office 365/HP Spectre x360

Microsoft Office continues to make a student’s life that little bit easier by offering reliable, easy to use, time-saving functionality, while continuing to develop new features that further enhance what is already a formidable collection of applications

Michael Hargreaves

Microsoft Office 365/Dell XPS 15 2-in-1

I’d recommend a Dell XPS 15 2-in-1 and the new Windows 10 to anyone who needs to get serious work done (before you kick back on your couch with your favourite Netflix show.)

Maryellen Rose George

Brother PT-P750W

It’s useful for office tasks as well as pragmatic labelling of equipment and storage – just don’t get too excited and label everything in sight!

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?