Gifting Circles seem like such a great thing. It starts out innocent enough when a friend whispers something in your ear at work or at church or something about inviting you to have a glass of wine tomorrow night with her friends. She says she is meeting a bunch of smart, successful women – like yourself of course – and you should come. Who wouldn’t want to go check that out? You need a break from work and the kids anyway. Besides, it’s good to get together for friendship, sisterhood, and a little laughter with other driven women who share your career or your interest in (something).
Your friend picks you up and it’s like a little caper trying to find a place to park and sneak in. This is fun already! You have some really good wine and talk about stuff with other women that you wouldn’t be able to say with men and the kids around. It’s exclusive which makes you feel special, as you can only get in if you were personally invited. Everyone is on a strict first name basis only. You recognize a few people who work in your industry which gives this whole thing some credibility. Plus you get so many hugs that you can just feel the love in the room. You connect with wonderful, giving women on such a great level that you don’t want to go home. Luckily everyone agrees to meet again in secret next Tuesday.
You don’t know it yet, but you got invited to what is usually called a ‘Gifting Circle’, a ‘Women’s Financial Circle,’ or a ‘Women’s Financial Collective.’ Men are strictly forbidden. You wouldn’t want men around anyway. All they would do is make rules and try to be logical and stuff. Besides, this is the chance to connect with other women who do what you do for a living and maybe accomplish great things. Its a huge part empowerment meeting, a great wine party, felony, and a women-only networking event all rolled up into one.
On the second night two of the women motion for you to join them in the front room. They tell you in hushed tones about how this group has done great things for women like raising money to fly local Hispanic women home to Mexico to escape abusive husbands. Or how they helped move someone’s ailing mother into a really good home that can treat Alzheimer’s, or they got cancer treatment for two orphans in Haiti, or they helped that woman in the red dress by the door get out of debt so she could start her own business and find a real man. These are all great things that really strum your heartstrings, especially after that second glass of high end Pinot. You lower your voice and ask where the money came from. Ah, they say, everyone freely gifts $5,000 and in a few months it will be your turn to decide what good thing you are going to do with $40,000.
Wow, you say as the wheels turn in your head.
Sure it’s a lot of money but you didn’t get invited because you are living paycheck-to-paycheck. This is a Gifting Circle for women who do (something). You all have good jobs and a middle class lifestyle.
Two wine parties later you freely write the check with a smile on your face.
You even sign a special ‘contract’ that looks all legal and everything that says you voluntarily gift this to the club without any expectation of ever getting it back. All you want to do is do good with your money, sort of like a pass-it-on kind of thing. Of course, as soon as you pay in your money you become one of the stars in this chart to the left. Once there are eight new stars, the ‘sun’ in the middle gets her $40,000 – an 800% payoff. The chart then splits in half and everyone moves up a level. The two green planets are now their own stars, the blue moon Mommies move up to planets, and the stars are now one step closer to their own big payoff. Maybe.
The day after you write your check you get a private call from someone in the group who tells you the name of the new ‘sun’ who will get your group’s $40,000 once everyone finds eight new stars. They also tell you some wild story about how she is going to save the lives of three Afghan war orphans with diabetes living in abusive Taliban homes but you aren’t supposed to tell anyone. It’s a secret.
Now, nobody is required to bring in new special friends to gift money but how else are you going to help save three abused Afghan war orphans living with war criminals? We’re supposed to be saving that country from the bad Taliban, right? In fact, there isn’t an organization doing anything at all. It’s just a bunch of women enjoying friendship, fellowship, and of course great wine. And secretly talking to their friends at work about why they should join their Gifting Club and part with $5,000.
That, plus as soon as all you “stars” get eight new people to kick in you get one level closer to your own $40,000 jackpot. You start dreaming about what kind of thing you can do to fix the world with $40,000. You want to do something better than everyone else so you have a great story to share at the wine parties.
But at one of the get-togethers you kind of wonder how these things can keep going. After all, it seems like the numbers don’t really work. You ask someone but they quickly shoot you down. Oh no, they say. The naysayers are men who don’t want strong, powerful women doing good things. We’re doing this ourselves! Don’t listen to that guy Sam with the blog.
Well is it legal you ask? It’s perfectly legal, they say with a little tinge of indignation. There isn’t a central organization and nobody is forcing anyone to recruit. Besides the IRS allows you to gift up to $10,000 without paying a tax. It’s up to you to “follow your heart and do what you think is best on your tax return when you get your $40,000″ they say to you with a wink.
So where’s the scam, you ask? It’s a reasonable question. Most of the time the women involved don’t see the crime, either. One of these just ripped its way through the wives of police officers in my hometown. After all, the $5,000 is a gift that they give freely and without any expectation of any return so they’re not victims. Just like a $50 birthday present to your niece, right?
Wrong. Gifting Clubs are illegal pyramid schemes. They’re done with really slick emotional appeal and promises of huge payoffs but sooner of later these clubs are going to run out of women to scam. It’s simple exponential math.
Lets assume you get in as one of the first eight stars. For all eight of you stars to move up to be moons after the first split you need to recruit a total of sixteen new people. Then for all eight of you moons to move up to planets you need to bring in 32 new stars. It keeps going. All of you initial eight might get paid after 128 new stars join, but to keep going and let everyone in the system receive their own $40,000 the scheme needs to bring in more people than exist on the planet. I suppose you’re going to run out of women in your city first, and that is when it starts to fade away and collapse. The money disappears but everyone says they swear they want to keep it going. Maybe next summer, the bottom levels all tell themselves.
I actually admire this kind of sophisticated ripoff. Not to say that I would run one of these. I’m not even sure I could. But all that emotion and wine hides a scam that willingly snookers women into giving up $5,000. They actually BELIEVE they are going to be able to help sightless and oppressed HIV+ sex slaves in Cambodia or whatever. Plus the top levels kind of suggest you don’t really have to report it to the IRS when you get your $40,000 so you can spend the whole amount on your secret good thing. That makes you complicit in tax fraud that feels good and fun at the same time, which draws you in deeper. It’s pure genius.
Read my new post about two women just sentenced to prison for running Gifting Circles.
- 54 Month Sentence In Pyramid Scheme (connecticut.cbslocal.com)
- Defendant In ‘Gifting Table’ Scheme Gets 4.5 Years In Prison (foxct.com)