Attorney General Hardy Myers today warned Southern Oregon residents that participation in an illegal pyramid scheme known as the Northwest Family Reunion may result in fines of $25,000 for each person they attempt to recruit. The so-called "gifting" pyramid is currently most active in Klamath, Lake, Jackson and Josephine counties but reports of meetings have been received from the Portland area and from throughout Central Washington.
"The name is new but the scheme is not," Myers 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 and The Gift Club.
Literature from the Northwest Family Reunion solicits payment of a $2,000 "gift" in order for individuals to join the pyramid. Using race car driving terms, participants start at the bottom of the pyramid as part of an eight-member "pit stop crew" and advance to "mechanics" then to "pace car drivers" and complete the cycle as "lead drivers." Supposedly, participants will rise to the top of the pyramid and receive a $16,000 payoff. In order to achieve the promised profits, a continuous chain of members must be recruited. To help avoid law enforcement officials, all "earnings" are collected at "reunion" meetings held in Washington.
Prospective players are told that the scheme is legal because it is a gift between friends and relatives, that they are not required to report the "earnings" to the Internal Revenue Service, and that both Oregon and Washington Attorneys General have approved the scheme. These representations are false.
"All pyramids are illegal because they are designed to collapse, making money for a few at the expense of many," Myers said. "When this one falls apart, we will not be able to spend tax dollars to assist individuals who lost money as willing participants in an illegal scheme."
Department of Justice investigators working with the Klamath Falls Police Department, the Klamath County District Attorney's Office and the Washington Attorney General's Office, have received reports of millions of dollars being illegally transported across the Washington-Oregon border. Players in both states are advised to stop all recruiting activities and return all money collected from participants. Failure to do so may result in legal action taken by the Attorney General.
Consumers with questions about Northwest Family Reunion and pyramids in general may call the Attorney General's consumer hotline at (503) 378-4320 or (503) 229-5576 (Portland only), 8:30 a.m. to noon, Monday through Friday or write Financial Fraud/Consumer Protection, 1162 Court Street, N.E., Salem, OR 97310. Information on pyramids also is available through the Department of Justice web site www.doj.state.or.us
Jan Margosian, (503) 947-4333 (media line only) firstname.lastname@example.org