Australian Authorities Warn Against Diamond Pyramid Scheme

The Australian Department of Consumer Protection is warning against a pyramid trading scheme by a company called Canadian Diamond Traders (CDT). Participants are enticed by a promise of a cash payout and a diamond.

In the Internet promoted program people are invited to invest $100 and then recruit others to join. According to CDT’s web site, the “10 Steps of CDT's Diamond Trading Program”, after registration members pay for their “Diamond Deposit”, becoming an “independent Diamond Trader and begin to purchase diamonds at wholesale prices.” At this point they have the option of paying a $100 or $500 deposit towards the final purchase of diamonds. In return for these “small deposits” members are eligible to receive “colossal discounts on high quality diamonds”.

Next, at the “Miner Position”, members are to “market CDT and its Diamonds to as many of the worlds' population as humanly possible. This is to facilitate the expansion of your marketing team. When the eight miner positions are filled on the table the team expands and the table splits.”

Members advance at this point to the “Cutter Position”. In other words, at this stage advancement is based on recruiting more members who deposit money. At this level, “Through the marketing efforts of all Diamond Traders on the diamond table, expansion takes place once more, and you advance again.” What are the nature or goals of these marketing levels is not detailed in the in the system description.

At the next level, Polisher, members are strongly encouraged to market CDT’s diamonds. It seems from the description that it’s possible to reach this level without selling any diamonds at all.

A member enters the “Collector Position” by being “successful at marketing our diamonds.” This is the so called ‘summit’ of the program. To complete the program and earn money members are to “continue to motivate the people on your team to get to where you are; by continuing to market CDT.” When team “completes its expansion and the eight miner positions are filled on your diamond table. The table will split one more time. Thus you have completed the DTP.”

At this point CDT will review the marketing campaign. Upon confirming that the member has successfully marketed CDT’s diamonds, CDT will pay a “marketing fee”: $3,000 and $2,500 worth of diamonds.

According to ABC in Australia, Consumer protection commissioner Patrick Walker says participants risk being prosecuted if they become involved in the scheme. “At this stage, we aware of no-one ... who has actually ... participated. But we're very concerned. This is an attractive proposition. It's well designed, it's cleverly marketed - particularly with the lure of a diamond - and we think it could catch on,” he told ABC.

It is not understood how people from outside of the diamond industry will be able to sell diamonds without a working knowledge of diamonds. No details about the quality, color, weight or polishing of the diamonds is clearly available on the site.