On 14 August 1998 the Chairman of the Committee wrote a letter to Sealey referring to the meeting with Douglas, Lawrence, himself and the Committee on 28 July 1998. It was pointed out to him that the general investigation into "money revolving schemes" was brought to his attention on more than one occasion. The general investigation did not preclude the Committee from undertaking investigations into specific entities that could be involved with harmful business practices as defined in section 1 of the Act. In terms of section 8(1)(a) of the Act the Committee may on its own initiative, undertake such investigation as it may consider necessary into any harmful business practice which the Committee has reason to believe exists or may come into existence.

It was put to Sealey that those operating "pyramid promotional schemes" would probably be involved in harmful business practices. The Committee was, with the information at its disposal, of the opinion that the business practices of Marketing for Success, trading as Alpha Club, could, in the light of the proposed definitions in the draft section 8(1)(b) (15) report, constitute a "pyramid promotional scheme". The proposed definitions of a "pyramid promotional scheme", "consideration" and "compensation" were:

"Pyramid promotional scheme "... any plan or operation by which a participant gives consideration for the opportunity to receive compensation which is derived primarily from the person's introduction of other persons into a plan or operation rather than from the sale of products by the participant or other persons introduced into the plan or operation".

Consideration "... the payment of cash or purchase of goods, services, or intangible property. Consideration does not include: purchase of products furnished at cost to be used in making sales and not for resale, purchase of products where the seller offers to repurchase the participant's products under reasonable commercial terms and the participant's time and effort in pursuit of sales or recruiting activities".

Compensation "... the payment of money, a thing of value, or any financial benefit or any discounts which may accrue to the participant. Compensation does not include: Payments to participants based upon sales of products purchased for actual use or consumption, including products used or consumed by participants in the plan and payment to participants under reasonable commercial terms".

The following is a quote from the letter dated 14 August 1998:

"Alpha Club contends that it is in the business of "supplying accommodation" or being in the "travel business" in general. If that were the case, one would assume that Alpha Club would derive its income from its members utilising the services of hotels, resorts and airlines. This is not the case, because Alpha's business; and that of its members, does not depend on selling accommodation. The turnover and profit of Alpha Club and its members are dependant on existing members recruiting new members. The income of Alpha Club and its members has no connection whatsoever with the members utilising or consuming the travel services".

It was agreed at the meeting on 28 July 1998 that Alpha Club would be given two weeks to respond to this letter. The Committee would then consider your response and would decide whether it should proceed with a section 8(1)(4) investigation into the business practices of Marketing for Success, trading as Alpha Club, its shareholders, management, marketing directors and members.