Local Pyramid Club Schemes and Cash Gifting Club Scams
You will likely first get involved in a local pyramid club when a friend, neighbor, or coworker invites you to attend an “opportunity meeting” to learn how to earn lots of money. At the meeting, you sit through a well-rehearsed presentation that downplays the traditional methods of acquiring money and will offer instead an exciting shortcut to wealth, fame and adventure.
To join, you must pay some type of initial investment to the scheme’s promoter, which gives you the right to recruit others into the privileged club or process.
It is typical of locally-based pyramid schemes to target closely knit groups, like churches or civic groups, and to encourage participants to recruit friends, family members, neighbors, business associates, workmates and relatives via word-of-mouth.
The mechanics and pitfalls of pyramid schemes is covered in greater detail in the Pyramid Schemes section. This section was separated to show you the distinct method of contact and the role that friends and associates have in causing you to lose money, however unintentionally.
Join the Gifting Club
To create an aura of respectability or benevolence they may be called “investment clubs” or “gifting clubs” and have attractive names such as “The Friendship Investment Club”, “Freedom Club”, “A Gift Network”, “Season of Sharing” , “The Spirit of Giving”, “Northwest Family Reunion” or “Creating a New Paradigm”.
When soliciting people to join “Co-Opportunities International”, promoters of the scheme commonly described it as a “social” or “gift” club where participants could exchange their talents and ideas with each other.
To become one of the eight members, a new recruit was required to make a “gift” of $2000, in cash, to the “resource chair”. Once the resource chair received the $16,000 in gifts, he was to leave that position and the pyramid was divided into two separate pyramids, with each participant moving up into the next level.
One popular pyramid theme is the “airplane game” in which new recruits buy in as passengers for $100 and are then told that if they bring in new investors they will be able to move up to flight crew, co-pilot and finally pilot. At that point they will receive $1,000 or more.
Or they may up the ante and have you pay $1,500 to be a “passenger”. Others are to pay also, and once the plane is full, each passenger can become a “pilot” and start recruiting others, with the promise of making $12,000.
One women’s “wisdom circle” uses lofty terminology and positions involving the sun, moon, sky and stars.
Investigators said recent scams, called “Pit Stop”, “NASCAR”, “Men’s Club” or “Money Exchange,” attracted 4,000 participants and targeted men by using auto-racing jargon. Participants were asked to put up a $2,000 contribution to become members of a “pit crew.” They were promised $16,000 as a “lead driver” after recruiting new participants who contribute money.
Officials received reports that those who participated could earn $50,000 to $75,000 and also heard that one top-level participant made $300,000 in three weeks. Some found the money to join Pit Stop by taking out a second home mortgage, and one woman who contacted a local radio station said she had been prepared to hock her wedding ring. Like most pyramid schemes, few people advanced to the payoff. Most just got taken for a a ride!
Working their way through different parts of the local community, Pit Stop recruited participants involved in construction, such as contractors, subcontractors and paint and hardware store employees. One version with agricultural terminology was geared to farmers while Dinner Party attracted middle-class to wealthy women involved in the real-estate industry, such as sales agents and mortgage brokers.
For Ladies Only Gifting Clubs
Modeled on the success of home party sales, a series of “ladies only” pyramid schemes, which are known by the names “Circle of Friends,” “Women Helping Women”, the “Gifting Club”, “Heart to Heart”, “Gifts for Charity”, “Renewal Celebration”, “Women Empowering Women,” “Women’s Empowerment Network”, “Women for Women,” and the “Dinner Party,” are represented as a gathering of women helping one another by “gifting” money through a tiered structure.
Recruiting material for some of the groups talks about a goddess and sisterhood and offer an interstate conference-call system to keep members in touch.
The system appears to be active in several circles and professions ranging from realtors, hairdressers, professors at universities to employees of school boards, courthouses and numerous businesses.
A lot of professionals as well as middle-and upper-class people are involved, people one would assume to be smarter than that. Even several male and female police officers in Auburn, Maine, were suspended or forced to resign after spending $2,000 to join the local “Changing Lives” pyramid scheme.
Dinner Clubs Pyramid Schemes
Dinner clubs use such euphemisms as “appetizer” and “entree” for levels of participation.
The pyramids which are misnamed as circles operate like this: The organizers portray the program as a progressive dinner party or birthday party. Eight people begin on the bottom rung as “appetizers” who contribute $5,000 each at a birthday party for the top person, or the dessert.
Between those levels are four soup-and-salad people and two entree people. Once the dessert person birthdays, or gets their $40,000, everyone moves up a notch: the entrees become desserts and split into two other tables, and eight more appetizers are needed for both tables.
Statistics show that only 10 percent of people who put up the money ever get a return. Once the pyramid reaches a certain stage, there are always too many people to be paid off, and the pyramid collapses. The key to the downfall of such schemes is that it eventually and inevitably requires about eight times more participants who put money in than actually receive it.
As if having a history provided respectability, they state that the plan originated 11 years ago in Toronto, Canada by a group of women to create money for charity. The concept was apparently so successful that the women realized they could use it to help each other. From Canada, the plan moved to Washington, then to Texas and beyond. It is now spreading across Great Britain faster than hoof in mouth disease.
Federal, state and local government officials say that not only are the various gifting circles illegal pyramid schemes, but as many as 90 percent of the overall members won’t ever get “dessert”, the top level in which participants can receive thousands of dollars beyond their initial investment.
Successful participants adamantly disagree.
Dismissing the possibility of personal gain on a large scale, participants insist that they give their $5,000 as gifts to offer psychological, spiritual and financial support and empowerment to other women. The schemes also purport to help charitable causes and women who are trying to escape an abusive husband or who have children with medical needs.
They say they have no expectation of one day being at the top, where they might be fortunate enough to have a “birthday” and receive their $40,000 dessert.
This is the reason the gifting circle is not a pyramid, they say. The group is about love and growth, the $40,000 payoff is incidental.
So whenever police issue an advisory stating the criminal aspect of the clubs and the potential of financial loss they are inundated with calls from residents insisting, often abusively, that they are participating in gifting clubs and not pyramid schemes, which are illegal.
“I believe in it and I am not going to stop doing it,” one lady said. “So there, arrest me.”
They’re very convincing that this is just women helping women and it’s nobody’s business but theirs. They make it a very wholesome, good thing when in fact they’re simply taking other people’s money.
Silencing Detractors of Gifting Clubs
Once participants have a vested non-returnable monetary interest in the program they are quite unreceptive to negative suggestions which might jeopardize their capital.
Early winners insist that detractors are simply jealous. Never having seen anyone lose money (prior to the scheme’s collapse) is their self-assurance that no one ever will.
Placing emphasis on their rights to give away money, after recouping eight times the initial payment, they minimize the collection aspect through continuous recruitment.
“In the beginning, it feels like it’s the money,” said one promoter. “It’s exciting to feel like you have a chance. But down the road, the real gift is the networking women have with one another and the things they learn along the journey. There’s nothing wrong with women supporting each other this way.”
One individual who said she lost $5,000 in the scheme is angry that the group is using the public’s distrust of government and the media to continue, while another, still clinging to the party line, said that she gave $1,800 to help other people and that she does not care if she gets anything in return.
“It’s a cyclical thing. Women understand cycles. It must be a natural process, as in life,” she said.
She said she believes the plan is not illegal because women cycle off the top and are done once they receive their payoff. She also believes that in an illegal scheme, a person remains at the top and continues to receive money from everyone who joins.
Such misconceptions and rebellious rhetoric are planted as seeds of self-justification at the informational meetings.
Mathematical logic dictates that these pyramids always collapse because their growth is not sustainable. You run out of people to ask in. There are a few people at the top making vast fortunes out of those at the bottom. If you are at the bottom, you will lose your money. If you cannot afford to lose both the money and the friends you recruit, don’t take part.
Promoters suggest that while mathematics shows that it cannot last long, these calculations do not allow for women buying back into the system (most of whom do). They feel that WEW is a cyclic process, like extended families who support newlyweds or struggling mothers and that if a program fails, those with the duty of care will, in most cases, reimburse those who have fallen short. Beneficiaries though are generally unwilling to be interviewed or photographed.
Women Empowering Women Gifting Clubs
Women Empowering Women claims to be “basically a support group for women whose main goal is the empowerment of women by providing for them the financial and emotional abilities to support themselves, their loved ones and their community.”
Realistically, the same motto could apply to a streetwalkers’ union. And support for your community could simply mean you are going to pay higher taxes or make a $10 donation to the local food bank.
“By creating a positive network, we facilitate a safe place to help eradicate the poverty and isolation that many women suffer. This provides a place for companionship that helps women to overcome shyness and fears that they do not have the ability to generate money.”
As the principle means of group contact is by phoning from your home we have to conclude that that is fairly safe, but with a $5000 entry fee you have to wonder about the poverty aspect. Most participants to-date have been outgoing and sociable individuals, able to influence the participation of friends or acquaintances to participate.
A noble cause indeed until you examine the means by which this is done. Once the meaningless platitudes are evaluated under the strong light of reason one comes to the inevitable conclusion that this process is nothing more than a dressed-up pyramid scheme.
For what is empowerment here but the ability to make money from others who you convince to join your money-making scheme.
And make no mistake about the basic underlying concept. Eight people each pay out $5000 to one person in order to join. Then the group splits in half and eight new people pay one person to join one breakaway group and eight others do the same for the other top dog. Supposedly forever.
Although the number crunching somehow instantly gets confusing, you must remember that for the process to continue the number of new recruits must DOUBLE each time the people at the top get paid. Mathematics aside, let’s get back to some of their pronouncements.
According to the literature provided by the organizers “it is the belief that there is plenty for everyone.” Stressing togetherness, the only pronouns used in their literature are “us” and “we”.
“We are not only able to enjoy the rewards for our own personal benefit, but for the entire group and those who we will be inviting to join us and share in the Gifting Circle.”
When you first come into the group you join the top line of eight heart shaped spaces wherein you place your name and phone number. When the eight hearts are filled you each pay the Receiver $5000. As the process will not be newly formed you will have four people above you and two above them, even though the triangular chart is inverted and called a circle to mask the obvious.
Then the structure breaks in half and becomes two groups whereby the top individual gets money from eight new participants. Then the upside-down pyramid splits again with you progressing one step higher after each payout split.
As new “Gifters” you can “experience trust balanced with action.” “By giving an unconditional gift, you become open to receive unconditionally.” Sort of like God’s love.
“Trust the system and remember this “feminine process” works best through sharing with others this opportunity.”
Without an endless stream of participants it doesn’t work at all.
“Men cannot be involved.”
Seeking to create an exclusively female operation that can quickly dismiss male detractors as lacking the global wisdom and understanding of such things female, they neglect to acknowledge the numerous male-oriented schemes like Pit Stop and the Airplane Crew which are identical in form, but lack the fantasy.
Instead of just saying they get together and enthusiastically talk about how much money they are making from the process, in a bid to lure in others, they mask it as “creating new ways of providing emotional support and financial gain in all of our lives”.
“We support the circle by sharing the experiences of the gift of support, the gift of sharing, of feeling valued and appreciated and celebrating with each other as each of our group receives their gifts.”
When you join up you go to meetings three times a week and everyone is handing over cash. It turns your head seeing all that money and they make sure all the new recruits see it being counted at the end of the night.
Participants recruit only family, friends and colleagues, and keep in contact through weekly meetings or conference phone calls to see if you have got your new recruits yet, creating a club-like feel. Soon they are acting like cult members and the more cautious cannot reason with them.
I know I would certainly appreciate your giving me your money as a gift and I am sure it must be quite a party atmosphere when a woman wallows in her $40,000 windfall.
The second level tier is the Supporter Position where you “assist in the continual expansion of the circle with a combination of trust and gratitude, balanced with a willingness to encourage each other.”
Talk it up and get out promoting it to new entrants or you won’t make it to the top.
“We are literally creating a new economic experience. The old belief of having to work hard for anything worthwhile in life is now changing and shifting with this process.”
Nothing much new about getting ripped-off but as I never liked the concept of working hard for something worthwhile, they’ve got my vote there.
Once in the third tier Apprentice Position you learn that “while our culture has taught us that it is more blessed to give than to receive; without people to receive the giving is not complete.”
I knew I should have paid more attention in bible study class. Keep promoting girls, you can’t move up a tier until eight new people join at the bottom, crack a cheque, and a new “circle” is formed.
“This is a circular process; no one holds any position that will reap more rewards than anyone else above or below her.”
This somewhat conflicting statement is belied by the fact that the never-ending circle of plenty has only one top level Receiver Position, which out of fifteen players is cryptically called the end and the beginning of the circle. “Now that “we” have received, “we” are once again in a position to give and the cycle continues.”
In other words, hey, I just got eight times what I put in, so sure, why not start again. After all, I am way ahead of the game and the momentum is still strong for new recruits clamoring to get in.
One participant acknowledged that many women do use some of their profits to start again at the bottom level but declined to say how many times she has gone through the system.
Charity and Goodwill in Gifting Clubs
“When a woman is financially gifted, she then completes the circle by gifting back other women who are in need, or by aiding a charity of her choice.”
That just about covers the altruistic bases. Do what you think best with the money you took unconditionally from the others. How wonderful that because you can make a donation with a portion of your booty, participants can portray it is a charitable organization.
Of course what you do with your winnings are your business now, but to truly fulfill the imagined mandate of the operation “we should share these gifts with our families, our communities, other women we may well know and those we may never actually meet in person.”
to read more, find out more, and learn more, go to: http://www.crimes-of-persuasion.com/Crimes/InPerson/MajorPerson/pyramid_clubs.htm