Oregon Department of Justice

Attorney General Ellen F. Rosenblum

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Attorney General Joins S. Oregon Law Enforcement In Warning Against Participation in "Gifting Clubs"

June 26, 2000

Attorney General Hardy Myers, Chiefs of Police Eric Mellgren of Medford and Mike Sweeny of Central Point today warned Jackson and Josephine County residents that participation in illegal pyramid schemes known as "gifting clubs" may result in criminal and civil penalties. The so-called "gifting" pyramid is currently active in the southern and central/western counties in the state.

"The name "Women's Empowerment Network" 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, 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. Under Oregon's consumer protection statute, participants may be fined $25,000 for each person they attempt to recruit.

"All pyramids are illegal because they are designed to collapse, making money for a few at the expense of many," Chief Mellgren said.

Information called into the offices of the Attorney General and the Medford and Central Point police departments reports area residents soliciting a "gift" of $5,000 in order for individuals to join the pyramid. Supposedly, participants will rise to the top of the pyramid as more participants are enticed to join and they will receive approximately a $40,000 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 secret meetings.

"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," Chief Sweeny said. "All these representations are false."

Consumers with questions about gifting pyramids may call the Attorney General's toll-free consumer hotline at 1-877-877-9392, 8:30 a.m. to 4:30 p.m., Monday through Friday, the Medford Police Department at (541) 774-2234, the Jackson County Sheriff's Office at (541) 774-6823, the Jackson County District Attorney's Office at (541) 774-8181 or the Central Point Police Department at (541) 664-5570. Information on pyramids also is available through the Department of Justice web site www.doj.state.or.us.

Contact:

Jan Margosian, (503) 947-4333 (media line only) jan.margosian@doj.state.or.us |
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