Local pyramid scheme targets trusting women

By RICHARD HANNERS

Whitefish Pilot

With all the bad news coming out of Wall Street these days, the story of Bernard Madoff’s Ponzi scheme is compounding investors’ worries.

Madoff was arrested Dec. 11 after confessing to employees that his illegal investment program cost clients as much as $50 billion.

Thierry Magon de la Ville huchet, 65, who committed suicide in his Manhattan office on Dec. 23, had invested about $1.4 billion of his clients’ money in Madoff’s scheme and lost tens of millions of his own money.

A variation of the Ponzi scheme is the “pyramid promotional scheme,” and a version of that scheme called “The Women’s Blessing Circle” is currently making its way through the Flathead.

At least eight women here, maybe more, have joined the “community of remarkable women,” as the scheme’s promotional letter calls them.

Each woman is invited to join a group of 15 by giving $2,500 apiece to two other women in the group. They are told they can expect to earn $40,000 as the gifting circle comes around back to them — but eight new women must join the Blessing Circle to make the overall scheme work.

In fact, it will take 120 women putting $5,000 apiece into the pyramid for the first 15 to get their money back. That adds up to $600,000.

Not only do investors in pyramid schemes lose money — it’s also illegal. State law defines a pyramid promotional scheme as one in which participants earn money “primarily from obtaining the participation of other persons in the sales plan or operation rather than from the sale of goods or services.”

Although rarely prosecuted, victims can also be considered criminals if they have profited from the scheme. But according to Lynne Egan, the state deputy securities commissioner, the state can enforce a $5,000 fine per violation if a participant does not cease and desist after being ordered to do so. Furthermore, the penalty for operating a pyramid scheme can be imprisonment up to 10 years and a fine up to $100,000.

The latest pyramid scheme targets women and goes under various names, including Gifting Club, Women Empowering Women, Dinner Party, Circle of Friends, Women’s Empowerment Network and Gifting Circle.

While the participants in the top tiers might get their money back — or possibly more — the majority will lose because the scheme cannot grow forever at the rate it requires. If each person must recruit eight more to the scheme, then eight recruitment cycles would require 1.5 million people. At $5,000 apiece, that adds up to $7.5 billion.

The language in the version circling around the Flathead is particularly insidious, preying on women’s trust and faith.

“We are a group of women who have discovered a way to help each of us fulfill our dreams,” the six-page introductory letter starts.

Claiming the circle has not been broken since the end of the 1980s, the letter says women in the group have “created a powerful way to access their spiritual, psychic and physical energies.”

In explaining “how can such a simple idea work,” the letter calls on honesty.

“As with everything in life, regardless what the activity, if driven by a dishonorable intention, it will ultimately fail,” the letter says.

The letter goes on to say that women who initially joined for financial reasons later found “their limiting beliefs and unconscious patterns came to the surface for healing.”

“Many women in the circle came to realize and identify with the pure joy of receiving, thus creating a new balance in their lives,” the letter says.

If that’s not enough of a hook, the letter congratulates anyone who joins.

“Finally, the women who will be your companions on this journey are, well, extraordinary,” the letter says.

Joining the Women’s Wisdom Circle is by invitation only and requires three steps — including weekly phone calls. That’s when interested women learn about the monetary requirements. They’re not laid out in the letter.