Gifting Programs

[RRRM]

Please tell me if this is illegal or not. I have been told that it is legal, but I want to make sure. Thanks

 

[I AM ALWAYS LIABLE]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by RRRM:
Please tell me if this is illegal or not. I have been told that it is legal, but I want to make sure. Thanks<HR></BLOCKQUOTE>


My response:

In some instances, it is legal; but in most situations, it is considered, at the very least, unhealthy to do so. If we knew what you were talking about, we could be more difinitive with an answer.

IAAL


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[HomeGuru]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by RRRM:
Please tell me if this is illegal or not. I have been told that it is legal, but I want to make sure. Thanks<HR></BLOCKQUOTE>

Could it be those pyramid schemes disguised as a gifting program?

 

[RRRM]

Okay , heres the deal. One of my friends was in the gifting program and she asked me to join... Here's how it works. You freely give a monetary gift to one of the members and your name goes on the list. When it is your turn to be gifted, as people come on the list the money is given to you. No one is forced to give the money. You try to get others to join. The more people that join the faster you will get gifted. Thats basically all there is to it. Can you please advise. The reason I am asking is - some of the people on our list have heard that it was illegal and if it is legal we would like to put thier mind at ease. Thanks for your help.


<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by I AM ALWAYS LIABLE:

My response:

In some instances, it is legal; but in most situations, it is considered, at the very least, unhealthy to do so. If we knew what you were talking about, we could be more difinitive with an answer.

IAAL


<HR></BLOCKQUOTE>

 

[I AM ALWAYS LIABLE]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by RRRM:
Okay , heres the deal. One of my friends was in the gifting program and she asked me to join... Here's how it works. You freely give a monetary gift to one of the members and your name goes on the list. When it is your turn to be gifted, as people come on the list the money is given to you. No one is forced to give the money. You try to get others to join. The more people that join the faster you will get gifted. Thats basically all there is to it. Can you please advise. The reason I am asking is - some of the people on our list have heard that it was illegal and if it is legal we would like to put thier mind at ease. Thanks for your help.


<HR></BLOCKQUOTE>


My response:

Even though I had no idea, at first, what you were referring to, with the help of HomeGuru's astute observation that this might be a "Pyramid Scheme", I did a little research. The following news articles describe and warn against "Gifting Programs" as mere illegal schemes to separate a fool and his money. You can make your own decision after reading the following:

Suspected pyramid scheme disbanded
Friday, September 24, 1999
THE ASSOCIATED PRESS
KENNEWICK -- The leader of a "gifting" club that Tri-Cities law-enforcement authorities are investigating as a possible illegal pyramid scheme has disbanded the operation.
Don Casey said he was sorry he ever became involved in the operation, called the Renewal Celebration.
"I'm guilty of being stupid," Casey said.
Casey, a 55-year-old church pastor who works for a Kennewick organization called the Society of Helping Hands, said he became overseer of the suspected pyramid scheme two days before police tried to shut it down Sept. 11.
He said he concluded that the club was "riddled with problems" after doing his own research.
He said he called Wednesday's news conference to publicly apologize to the Tri-City church community, and to warn people throughout the state to stay away from pyramids.
Kennewick police confiscated more than $51,000 from a Sept. 11 "gifting" meeting the Renewal Celebration held at a hotel.
Since then, the group has been under investigation by the Benton County prosecutor's office, Kennewick and Richland police, and the Benton County sheriff's department. No arrests have been made.
Club members estimate that there are a few thousand participants in the Tri-Cities.
Casey said he suspects he will be blasted by many in the organization who want it to continue.
Some Renewal Celebration members said they expect to continue in one form or another. A few members of the loose-knit organization said they believe Casey's about-face was part of an attempt to wrest money away from the club to benefit his organization, the Society of Helping Hands.
"No one is really behind him," said Connie Wormington, a club member.
Casey said some members don't want any accountability or oversight. He said his suggestion that more of the club's money be given to charity was met with opposition.
Members have described the operation as a way to pool their resources and give away the pot to needy farm laborers, young families and everyday folks saddled with high-interest credit-card debt.
Members usually join by contributing a $2,000 "gift." Some eventually might receive a $16,000 gift, although no one is guaranteed such a return.
A financial return depends upon members' ability to constantly recruit others to join. When recruiting slows, the pyramid can collapse, leaving those who joined the organization late the losers.
© 1999 The Associated Press.


Moore warns of pyramid schemes

JACKSON/Aug. 10/The Associated Press - Two pyramid schemes that promise winnings up to $16,000 in exchange for a $2,000 investment are illegal and don't pay off, Mississippi Attorney General Mike Moore said.

The so-called Dreamweavers and Private Gifting schemes have been offered by phone across the state recently, Moore said.

Both are no more than a trick to separate Mississippians from their wallets, he said.

''Although the first few might get $16,000, those on the bottom will have to lose their $2,000 for this to happen,'' Moore said in a written warning. ''It is just like the children's game of musical chairs. When the music stops, someone is going to be left standing.''

Moore said his office has been flooded with calls complaining about the schemes.

Participants are asked give a ''gift'' of $2,000. They get a slot on a board, which contains a tracking number. As other slots are sold, participants' numbers advance. Numbers at the top after a set time are supposed receive the payoff, according to Moore.

The schemes operate on the notion that gifts are untaxed and generate money that will be passed on to the participants.

''I can think of no one who would really consider the payment of $2,000 a gift,'' Moore said.


Pyramid scheme moving through Treasure Valley
Patrons are asked to pay $5,000 to attend dinner party for needy women
Associated Press
BOISE -- The Attorney General's Consumer Protection Unit is warning Idaho consumers to avoid what appears to be an illegal pyramid scheme that is moving through the Treasure Valley.
The scheme is known by the names "Circle of Friends," "Women Helping Women," "Women Empowering Women" and "Women for Women." It is set up as a dinner party where women are invited by friends or acquaintances to attend a party that purports to provide gift money to women in need.
They are told that if they give $5,000, they'll be seated at the "appetizer" level. The women are also told that if eight more women agree to come to the next party, the first group will advance to the "soup/salad level." Once a third group of eight women again fills the appetizer level, the original women are told they will move to the "entree level."
Finally, the women are told that if still another eight women join the "appetizer" level, the initial women will progress to the dessert level and receive a "birthday gift" of $40,000.
To continually fill the appetizer level, the partygoers are encouraged to invite other friends and acquaintances to attend the parties.
Several women have reported to the Consumer Protection Unit that they were instructed to bring the $5,000 in small bills to avoid attracting the attention of their bank or the Internal Revenue Service. Some callers also reported that they have not been told the location of the parties. Instead, they are told they will be escorted to the party after meeting in a designated parking lot.
"Anyone should think about the risks of taking $5,000 in small bills to a grocery store parking lot to be escorted to a secret location for the purpose of making a charitable gift," said Deputy Attorney General Michele Butts.
Idaho law prohibits pyramid schemes, classifying them as felonies.
"Neither providing money to needy recipients, nor disclosing the potential risk of losing one's money, nor `gifting' the money to avoid tax consequences absolves citizens of their obligation to comply with Idaho's Pyramid Statute," Butts said. "Participants and promoters should be aware that Idaho law provides for both civil and criminal penalties for conducting an illegal pyramid."


‘Pyramid Scheme’ Losers Can Sue
BY MICHAEL A. RICCARDI
New York Law Journal
Monday, December 6, 1999
PEOPLE WHO lose money in "pyramid schemes" may seek damages in lawsuits based on common law fraudulent inducement theories, a Civil Court judge has ruled in a Bronx small-claims case.
Even though the New York statute that outlaws arrangements such as pyramid schemes, in which funds are funneled by new recruits to the people situated above them in the scheme, does not give private citizens a statutory right to recover their losses, Judge Paul A. Victor ruled, victims of pyramid schemes can press a common law claim that they were induced by fraud into participating.
In two cases under the capt

 

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[HomeGuru]

<BLOCKQUOTE><font size="1" face="Verdana, Arial">quote:</font><HR>Originally posted by RRRM:
Okay , heres the deal. One of my friends was in the gifting program and she asked me to join... Here's how it works. You freely give a monetary gift to one of the members and your name goes on the list. When it is your turn to be gifted, as people come on the list the money is given to you. No one is forced to give the money. You try to get others to join. The more people that join the faster you will get gifted. Thats basically all there is to it. Can you please advise. The reason I am asking is - some of the people on our list have heard that it was illegal and if it is legal we would like to put thier mind at ease. Thanks for your help.


<HR></BLOCKQUOTE>

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HomeGuru response: thanks IAAL. Those reports are great. Just a tip of the iceberg.

For our writer, the botton line is the program is indeed a pyramid scheme. Do a search on any major search engine using keywords Ponzi or pyramid scheme.
Any program where you have to recruit people to bring in cash in order for the program to be kept alive will not work. If all of the people in the entire world joined the program, what happens to the very last groups to join? How are they going to benefit when there are no other new people to join, thus no new cash resulting in them getting scewed out of their hard earned dollars, yen, pesos etc.
Please use you gift of intelligence and common sense to figure this one out.

Need a third opinion? Contact your State Consumer Protection Office and the Office of the Attorney General.

Here is what I do when people ask me to join. I tell them I'm good for $10 grand on the first round. Before I gift my money though, give me a copy of the written opinion from the AG's office confirming that this program is legal. Guess what, I am still sitting on my money waiting.