An illegal pyramid scheme, in which women are invited to give $5,000 in the hopes of receiving $40,000 in six months by recruiting other paying participants, is active again in Ashland.
The Women's Wisdom Circle is modeled after similar gifting-club pyramids that use messages of woman empowerment and "sisterhood" to entice participants to recruit new members for economic gain.
These clubs also operate under the names of Women Helping Women, which has a party for the woman on the top of the pyramid, or the Women's Dinner Party, a dining-themed club that rippled through Ashland a decade ago.
The first 10 percent to join a pyramid can make money. The pyramid usually collapses before later recruits make it to the top. A nine-level pyramid quickly exceeds the entire population of Oregon.
Participants could be investigated and prosecuted by the Oregon Department of Justice. Violators may be required to refund all the money they have received and pay up to $25,000 per violation of law. Prosecution also results in public records, which can lead to embarrassing publicity. Friends and relatives recruited to join could sue participants.
For more information: Refer to the Oregon Department of Justice's website page on pyramid schemes (http://www.doj.state.or.us/finfraud/pyramid.shtml), call the Attorney General's Consumer Hotline at 877-877-9392, or email firstname.lastname@example.org.
Oregon Revised Statute 646.609: "Pyramid club" and "investment" defined. As used in ORS 646.608 (1)(r), "pyramid club" means a sales device whereby a person, upon condition that the person make an investment, is granted a license or right to solicit or recruit for economic gain one or more additional persons who are also granted such license or right upon condition of making an investment and who may further perpetuate the chain of persons who are granted such license or right upon such condition. "Pyramid club" also includes any such sales device which does not involve the sale or distribution of any real estate, goods or services, including but not limited to a chain letter scheme. More at http://www.leg.state.or.us/ors/646.html.
The clubs try to circumnavigate laws against investment pyramids by saying membership is based on women helping women by giving each other cash gifts.
It is illegal, according to Oregon law, to operate a club that depends on an ever-increasing supply of buy-in participants. Participants can be prosecuted and violators could be forced to refund money received and pay $25,000 per violation of law. Most pyramid organizers who are brought to the attention of the state Attorney General's Office first receive a letter warning them of the consequences if they continue.
Recent emails from the account of email@example.com, which has been used by Jumana (Fallenstar) King-Harris, a co-founder of the Goddess Temple of Ashland at Jackson Wellsprings, were sent recruiting women to join the Women's Wisdom Circle.
"This group created a powerful way to access spiritual, emotional and physical energies through the structure of the Wisdom Circle," states the introduction email. "The Circle is always moving, active and circulating the energy of giving and receiving until it is complete for each woman."
Messages left Tuesday for King-Harris on her cell phone and at the Jackson Wellsprings were not returned by late Wednesday.
The themes of pyramid schemes are crafted to appeal to specific groups. Nationwide, Pit Stop and Airplane Game clubs lure men in by explaining they move up to the "lead car" or the "pilot seat" as new investors join.
Criminologists refer to these clubs as "affinity scams" because they target members of an identifiable group, such as religious or ethnic communities, the elderly or gender groups.
"People are more likely to trust someone from their community," says Echo Fields, a sociology professor at Southern Oregon University. "Bernie Madoff's Ponzi scheme was an affinity scam because the vast number of his investors were fellow Jews. These scams appeal to people's sense of solidarity and identity in a community and that makes them more vulnerable."
Ponzi scams require a person to invest. Pyramid schemes also require the person to recruit new members.
"Only the name of the pyramid changes," says Tony Green, spokesman with the Oregon Department of Justice. "We've put several of these out of business over the years."
Like the Women's Dinner Party scheme that rotated through Ashland and the state in 2000, the Women's Wisdom Circle uses dining terms to describe levels: eight new recruits pay $5,000 to start at the appetizer level, then move to the soup and salad level, then entree, and finally, dessert.
A person rising to the dessert level of a 15-person pyramid theoretically could receive payments totaling $40,000 before leaving the group.
The group is then split in two, with each of the two "entree" people at the top of two new groups, which need eight new recruits to survive.
A pyramid's need for new recruits can quickly exceed the state population, according to the Oregon Department of Justice website page (http://www.doj.state.or.us/finfraud/pyramid.shtml).
Participants in the Women's Wisdom Circle must recruit one person to move up a level. They can also pay $5,000 more to skip a level. Women receive training by "senior sisters" and read from a script when answering recruits' questions, says an Ashland woman who was approached by a club member.
Women are told that they were carefully chosen and they should not talk about this in public. They join in on weekly conference calls and spend about 10 hours a week talking with other members in their club and finding and recruiting new members. It becomes a part-time job that may or may not pay off after six months or longer, a club member told the prospective recruit, who requested her name not be used to protect her friends in the Women's Wisdom Circle.
The recruit asked the woman on top of the pyramid if the club was legal. She was told that it is legal to gift someone $12,000 a year under IRS laws, but if brought to court, the club is "legally unfriendly" and members "might have to defend themselves."
The recruit searched the Internet and found that these types of recruiting clubs are illegal and risky.
"The woman who wanted me to join said she had belonged to a circle before that didn't work out because the group didn't have the right focus or energy," the woman said Tuesday at an Ashland coffeehouse. "I took that to mean the focus and energy to get new members, not to help women."
The woman shook her head in relief and disbelief. "How could you not type in a search before you wrote a check for $5,000?" she said. "I'm a feminist and I don't like anything that targets women. This pisses me off."
Reach reporter Janet Eastman at 541-776-4465 and librarian Nick Morgan at 541-776-4477.