For Immediate Release
Media Contact: Todd Dvorak
(208) 334-4112

Date: November 25, 2014

Attorney General Warns Against Taking Part in Pyramid Schemes and Gifting Circles

(Boise) – Attorney General Lawrence Wasden is urging Idaho citizens to avoid participation in a variety of ongoing and illegal pyramid schemes known as “gifting circles.”

The Attorney General’s Consumer Protection Division has received two reports in recent weeks of illegal gifting pyramids operating in southeastern Idaho.  The reports identified the schemes as a “Women’s Wisdom Circle,” one of which is based a formal dinner theme, the other a gardening theme.

In both schemes, Wasden said participants are recruited to pay money – up to $5,000 – with the promise of advancing to the top position by recruiting others into the circle.  Those advancing to the top position in the circle receive payments much higher than the initial investment, according to reports.

Wasden said it’s clear the schemes violate state law, and any proceeds above the amount paid in are subject to state tax laws.

“Taking part in an unlawful pyramid scheme violates the Idaho Consumer Protection Act and is a felony under the state’s criminal code,” Wasden said.  “Make no mistake – taking part in these schemes is illegal.  Anyone who has received money from participating must pay it back.  Failure to do so may result in civil or criminal enforcement action.”

Wasden cited a 2013 federal case in Connecticut as a prime example of the risks of operating or participating in gifting schemes.  In August 2013, a federal judge sentenced Donna Bello and Jill Platt, both of Guilford, Connecticut, to multiple years in prison for running a dinner party-themed pyramid.

The women – convicted of wire fraud, filing false tax returns and conspiring to defraud the Internal Revenue Service – were also ordered to pay $32,000 in restitution.

Reports of gifting circles taking place in southeastern Idaho are similar to the scheme perpetrated in Connecticut, Wasden said.

In one Women’s Wisdom Circle reportedly operating in Ammon, participants are being asked to pay a $5,000 entry fee.  By recruiting others, participants can then advance up the pyramid through levels named after the courses of a formal dinner: appetizer, soup/salad, entrée and dessert.  Reports investigated by the Consumer Protection Division indicate those at the top of the pyramid have received payments of up to $40,000.

The gardening theme gifting circle operating near Preston makes “soil” the entry position, while “harvester” rests at the top of the pyramid.

The schemes are promoted as gifting programs intended to empower women and claim to adhere to IRS gifting rules.  Women are encouraged to keep their involvement secret and are required to sign a statement that the money they pay is a gift, with nothing expected in return.

The statements are false and do not make participation legal, regardless of what potential recruits are told, Wasden said.

“Participants should stop immediately,” Wasden warned. “Unlawful pyramid schemes collapse, hurt people financially and are a crime in Idaho.”

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