The web site promoted by Liquorice Mix Ltd encouraged customers to purchase CDs at prices of between £20 and £750. Each disc was affiliated to an electronic product, like a laptop or an MP3 player, and disc purchasers were given a place in a queue to obtain the electronic product as a gift.
According to the DTI, when the queue for a product had reached a prescribed number of members, varying between 10 and 150, the individual at the front of the queue received the gift, but the number of members waiting far exceeded the number of gifts received.
The system, known as a straight line matrix, is similar to the notorious pyramid schemes, but does not require the same sort of exponential growth. Even so, the system inevitably pays off only for those participants who join early, while the majority never receive the promised gift.
Liquorice Mix, from Oxford, withdrew the web site shortly after the DTI began its investigation.
Winding up the company in the High Court in London, Mr Registrar Rawson said:
"It appears to me that this is plainly a money circulation scheme, and that it is thoroughly undesirable. I have no hesitation in saying that the scheme is essentially fraudulent, and that the company ought to be wound-up on just and equitable grounds."
The company is now in the hands of the Official Receiver.