The Brookings Police Department has joined Attorney General Hardy Myers in warning people that participation in illegal pyramid schemes known as gifting clubs may result in criminal and civil penalties.
Brookings Police Detective John Bishop said Thursday there is evidence that local residence may be active in the so-called gifting pyramid scheme.
Bishop, quoting Attorney General Myers, said that under Oregons consumer protection statute, participants may be fined $25,000 for each person they attempt to recruit.
Myers pointed out a current scheme operating under the name Womens Empowerment Network.
The name, Womens Empowerment Network, is new but the scheme is not, he said.
We have dealt with similar gifting pyramids since 1994, and we have little tolerance for pyramid organizers and participants.
Earlier pyramids with similar characteristics included the Airplane Game, Friends Network, The Gift Club, Northwest Family Reunion, Women Gifting Women, For Women Only, Diners Club, The Dinner Club, Christians Helping Christians, Circle of Friends and Original Dinner Party.
All pyramids are illegal because they are designed to collapse, making money for a few at the expense of many, Bishop said.
We have had reports of area residents soliciting gifts of $5,000 in order for individuals to join the club, he said.
Supposedly, participants will rise to the top of the pyramid as more participants are enticed to join and they will receive a $40,000 payoff. In order to achieve the promised profits, a continuous chain of members must be recruited, Bishop said.
To help avoid law enforcement officials, all earnings are collected at secret meetings, he said.
Prospective players are told that the scheme is legal because it is a gift between friends, that they are not required to report the earning to the Internal Revenue Service, and that the attorney general has approved the scheme, he said.
All these representations are false, Bishop said.
Consumers with questions about gifting pyramids may call the attorney generals toll-free consumer hotline at (877) 877-9392, Monday through Friday, 8:30 a.m. to 4:30 p.m.
For more information or to report a possible pyramid scheme, call (541) 469-3118.
Information on pyramids is also available through the Department of Justice web site at http://www.doj.state.or.us