August 11, 2000
"Pit Stop", "Dinner Party", and Other Schemes
Target Washington and Idaho Regions
The Better Business Bureau serving
the Inland Northwest recently joined with Attorney Generals in Idaho and Washington to try
to stem a troubling surge in pyramid schemes.
At a press conference to announce a settlement in "The Pit Stop" scheme, the BBB
and law enforcement agencies discussed that and other popular schemes, including "The
Original Dinner Party," which primarily targets women.
"Calls are pouring into the BBB from confused and uninformed individuals all over the
Inland Northwest," stated Jan Quintrall, president of the BBB in Spokane. "We
are concerned by how quickly these pyramid schemes are spreading from township to
Participants are invited by co-workers, relatives, neighbors, or fellow club or church
members to attend private meetings. While invitees are not asked to pay any money
up-front, eventually participants are asked to contribute $5,000 to buy a
Owen Clarke of the Washington Attorney General's Office noted that the philosophy of
charitable giving is often used to draw people in. "Organizers cloak their schemes in
feel-good words like gifting and renewal celebrations, but it is nothing more than an
age-old scam that separates people from their money... only a few people walk away
winners. The majority lose everything."
Marilyn Thordarson, director of public relations at Sacred Heart Medical Center, and Cathy
Loan, CEO, Spokane Catholic Credit Union (SCCU), discussed how easily people become caught
up in the promise of "easy riches."
"We have had to send out a clear message to staff that solicitation (of such offers)
within the workplace violates our personnel policy," Thordarson said.
The SCCU became aware of a gifting club when several members requested loan proceeds or
savings withdrawals in cash. "Some members did not want their husbands to know about
their transactions. Instead of becoming debt-free and empowered, members have fallen
deeper in debt, jeopardizing personal relationships with those they have recruited into
their clubs," said Loan.
People falsely believe that the Original Dinner Party and similar "gift" clubs
are legal enterprises. Participants are told that state gifting "laws" permit
their participation. They are also misled by false claims of endorsement from the FBI, the
BBB and the Attorney General's Offices.
Almost every state has laws prohibiting pyramid schemes and/or assessing penalties on
those who participate. In Washington State, for example, anyone participating in an
illegal pyramid is violating the state Chain Distributor Scheme Act and is subject to
Sgt. Bob Pharris of the Coeur d'Alene Police Department noted that pyramid schemes are
also illegal in Idaho. "Our Police Department will investigate and seek prosecution
of the people involved."
The BBB advises consumers who are approached by such offers to ask themselves three
Do I have to make an "investment" or give money to get the right to recruit
others into the program?
When I recruit another person into the program, will I receive what the law calls
"consideration" as a result? That usually means money.
Will the people I recruit have to make an "investment" or give money to get the
right to recruit and receive "consideration" for getting other people to join?
If the answers are "yes", steer clear of the scheme. More information on how to
tell a legitimate multi-level marketing opportunity from a pyramid scheme is available on
the BBB web site. Go to http://www.bbb.org/library/tippyra.asp.
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