A new scam is targeting women in eastern Idaho and the attorney general is warning people not to get involved.
There are reports of two “Women’s Wisdom Circles,” one in Preston and one in Ammon. They're also known as "gifting circles." Deputy Attorney General Brett DeLange says women are recruited to pay, or gift, up to $5,000, with the promise of advancing to the top of the pyramid by recruiting others into the circle. Participants get payments from the people coming into the scheme under them.
DeLange says the scheme in Ammon is based on a formal dinner party theme. “The participants start up the pyramid through courses of a former dinner,” says DeLange. “You start with the appetizer level, and then you go to the soups and salad level, then the entrée level and finally the desert level.”
DeLange says the scheme has nothing to do with food; it’s just a way to identify levels in the pyramid. A similar scheme in Preston is based on a gardening theme. The entry position is known as “soil,” and “harvester” is the top of the pyramid.
DeLange says it’s a classic pyramid scheme. “You solicit people to donate money and then you get more money as they solicit other people to join the pyramid and make payments.”
He says pyramid schemes are bad in several ways. “They’re felonies; they’re also violations of the Consumer Protection Act. Ultimately it’s because invariably pyramid schemes collapse and while maybe a few people at the beginning, at the top, score a lot of money, most people lose everything they put into it and they’re out thousands of dollars.”
DeLange says organizers tell women to keep the gifting circles a secret. Women are told the IRS considers the scheme legal, which isn’t true. They’re also required to sign a statement saying the money they pay is a gift and that makes the scheme legal. DeLange says that won’t hold up in court.
“Some people say if we call it a gift, it makes it not a pyramid and that’s just false. Calling it something different doesn’t make it legal.”
DeLange says he’s seen the pyramid scheme pop up many times before. “These things come every few years and inevitably people lose thousands of dollars and its money they can ill afford to lose.”
DeLange says the AG’s office is actively looking into the schemes. He advises anyone involved to get out and give back any money they’ve made since joining.
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