Attorney General Issues Warning About Pyramid Schemes

(Pierre) – Attorney General Mark Barnett is warning South Dakotans about the resurgence of pyramid schemes in the western part of the state.  “These so-called  ‘gifting’ pyramids are illegal and may result in criminal and civil penalties for those who participate,” says Barnett.

The scheme currently circulating is known as “Women Gifting Women” or “The Dinner Club.”  

Barnett said, “No matter how enticing these plans might seem, they are illegal because they are designed to collapse, making money for a few at the expense of many.”

The “gift” amounts start at $100, but the Attorney General’s office has received reports of $5000 ‘gift’ solicitations.

Prospective players are told that the scheme is legal because it is a gift between friends and they are not required to report the “earnings” to the Internal Revenue Service and that the Attorney General and federal officials have approved the scheme.  All these representations are false.   

“Pyramid and gifting groups are not only a bad idea, they are illegal.  I urge you to contact my office before getting involved with these schemes.  Last year our office recovered more than a million dollars in restitution and court fines. Some of the participants in the schemes also received suspended jail time. Playing the pyramids will get you into court.”  Barnett said.

For information about pyramid schemes and gifting clubs contact the South Dakota Consumer Protection Office at 1-800-300-1986 or www.state.sd.us/atg.

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