Attorney General George Jepsen and Department of Consumer Protection Commissioner William M. Rubenstein today announced that five former participants in an alleged illegal pyramid scheme will forfeit a total of $202,500 through voluntary compliance agreements reached with the state.
The compliance agreements come as a result of the Office of Attorney General and Department of Consumer Protection’s investigation into the “Women’s Gifting Tables” scheme.
“As with any pyramid scheme, these gifting tables are inherently deceptive,” said Attorney General Jepsen. “Representations are made about a potential for large sums of money that, as recruitment stalls, are unattainable. People lose thousands of dollars believing they will receive a windfall return that never materializes. Consumers should be aware that state and federal law prohibits these kinds of schemes, and any offer involving upfront money payments with promises of big profits that depend on recruiting others should be considered suspect.”
“These pyramid schemes resurface every few years in different forms, but they are always illegal,” Commissioner Rubenstein said. “Anytime you are not selling a product or service, but have to recruit new members into the scheme in order to get paid, it is an illegal pyramid. Simple math dictates that within a very short period of time, the number of new recruits who are needed in the scheme will outstrip the entire population of Connecticut, with nearly everyone but the original players losing everything. Beyond causing financial loss, these schemes are insidious because they require every recruit to perpetrate the scam on the next victim, and thereby commit fraud themselves.”
The individuals who have entered into an Assurance of Voluntary Compliance with the state are:
- Patricia MacKenzie of Essex, who will forfeit $45,000.
- Elizabeth Culligan of East Haven, who will forfeit $40,000.
- Terrell Naumann of Branford, who will forfeit $20,000.
- Sally Stedman of Guilford, who will forfeit $65,000.
- Felicia Zaffin of Branford, who will forfeit $32,500.
The individuals have also agreed that they will not participate in any gifting tables or other pyramid schemes, and that they will cooperate with the state’s investigation. The forfeited funds will be deposited into the state’s General Fund.
In this scheme, women are encouraged to join a small group known as a “table” in which they each provide a $5,000 gift to another woman in the group. As new women join the group, others move up the pyramid into higher “positions” to eventually receive their own gifts totalling much more than their initial contribution. When such schemes fail to recruit enough new members, the pyramid collapses, leaving the newest members with nothing.
Pyramid schemes are considered a violation of the Connecticut Unfair Trade Practices Act. The voluntary compliance agreements resolve state civil claims only, and are not related to or resulting from any federal criminal matters. The state’s investigation into Women’s Gifting Tables remains active and ongoing.
Assistant Attorneys General Jeremy L. Pearlman, Michele S. Lucan and Phillip Rosario, head of the Consumer Protection unit, are assisting the Attorney General with this matter.
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