Gifting Pyramid Scheme Busted
Women’s gifting scams have been running for years. Recently there have been two scams that have been hitting the U.S. and Canada: Women’s Wisdom Circle, Women Helping Women.
These scams are promoted as gifting programs intended to empower women and claim to adhere to IRS gifting rules. Women are encouraged to keep their involvement secret and are required to sign a statement that the money they pay is a gift, with nothing expected in return.
These statements are false and do not make participation legal, regardless of what potential recruits are told. You are not helping other women by bringing them into these scams. You are hurting them.
Legal action is finally being taken against this scam. The Mission RCMP have arrested four individuals and executed four search warrants in relation to a fraudulent gifting circle.
Here is how the scam works:
Here are the details of the arrests:
The Mission RCMP have arrested four individuals and executed four search warrants in relation to a fraudulent gifting circle. This is an illegal pyramid scheme that is active across the Lower Mainland.
Mission RCMP launched a criminal investigation following a September 25, 2017 complaint to the Coquitlam RCMP alleging there were District of Mission employees, contractors and volunteers working within the RCMP detachment, running a large-scale gifting circle.
On February 20, 2018 Mission RCMP, with assistance from the Federal Serious and Organized Crime Unit (FSOC) executed four search warrants at four locations throughout the District of Mission. Four people were arrested and have since been released without process, while the investigation progresses.
While police focussed on the Mission-based gifting circle, investigators now believe that thousands of people may be involved, or are being actively recruited across the Lower Mainland. More than 100 gifting circles or clouds as they are also known, have been identified by police in the Lower Mainland. Similar incidents have occurred across Canada.
New participants are asked to attend meetings and to recruit two people. Once the lowest group of eight people has been filled, each of them are asked to contribute a $5,000 gift to the person at the top of the pyramid, also known as the birthday spot. Participants are advised to use false names and to keep the gifted money in cash form, to avoid drawing suspicion from financial institutions.
There are virtually no winners in this type of pyramid scheme, warns Inspector Annette Fellner, Officer-in-Charge of the Mission RCMP Detachment. People who are involved in this kind of fraud are imaginative. They sound convincing and say the right thing to make you believe it’s perfectly legal when it isn’t.
- Up to 11 incidents involving gifting circles have been reported to police in the Lower Mainland in the past two years.
- The scheme is generally directed toward law abiding women who are asked to gift $5,000 to gain entry into the cloud or circle.
- The primary means of communication for the people in this scheme is an app called Telegram Messenger.
- Participants attempt to legitimize the payment of $5,000 by calling it a gift and falsely claiming it is not taxable.
- This scheme, like all pyramid schemes, is illegal.
- People should understand that, not only could they suffer a personal financial loss for their involvement in gifting circle or similar pyramid schemes, but they could face tax implications through the Canada Revenue Agency, and/or criminal charges.
- Information about pyramid schemes and how to avoid them, can be found at Canadian Anti-Fraud Centre, toll free at 1-888-495-8501 or the federal Competition Bureau toll free at 1-800-348-5358.