Recently, we have received several calls about participation in so-called “gifting circles.” As described to me in the calls, people are recruited to gift a small amount of money. Then, those who are new recruits look for others to join the “circle” under them. As new members join the “circle”, they gift more money which moves up the chain to those above them. The recruits are told that if they can bring new people in, they will be gifted money, and so on and so on.
This is not a circle! Circles loop around for infinity. That is what makes a circle. This is a classic pyramid scheme. They are using the word circle to confuse new recruits. If you placed let's say thirty people in a circle, how many people would be under the circle? Answer … no one.
What about companies like Amway?
Amway is a multi-level marketing opportunity but is not an illegal pyramid scheme. Why? They sell products. As a result, it is lawful. I am not suggesting participation in Amway or any other company is a good business decision. I am merely differentiating a real company from what is patently illegal.
How do you know if something is an illegal pyramid scheme?
If the only purpose of the endeavor is to recruit people under you, it is illegal. If you are developing a marketing team to sell products, it is not illegal.
What are the penalties for engaging in an illegal pyramid scheme?
Participants are guilty of a high and aggravated misdemeanor. Organizers can be guilty of a felony. However, any person with significant participation can arguably be considered an “organizer.”
But I did not know it was illegal. Is that a defense to being charged?
No, because it's obviously illegal. Pretending not to know something is illegal is not a defense to any crime. O.C.G.A 16-12-28 clearly states that “no person may establish, promote, operate, or participate in a pyramid promotional scheme.”
But Mr. Lawson, this is “gifting,” not promoting anything. It is a Christian movement:
It is not gifting or Christian to get others to give you money in the hopes that they can get others to give them money down the chain. Eventually, when new recruits cannot be found, most people down the chain lose their money and waste their time. This is the end of all pyramid schemes. The pyramid collapses, and the people at the bottom lose their money and their time.