Attorney General Seal

Gifting Club Still Spreading in South Dakota; Barnett Moving Forward with Prosecutions

Gifting Club Still Spreading in South Dakota;
Barnett Moving Forward with Prosecutions

(Pierre) – Attorney General Mark Barnett today reminded South Dakota consumers that gifting clubs and other pyramid schemes circulating throughout the state are illegal.

"My office and several local State’s Attorney are prosecuting these cases," Barnett said. "The problem with these pyramid schemes is that there are always many victims who lose money."

Promoters of the pyramid schemes are targeting their friends, neighbors, and relatives. They claim that a $2,000 gift or investment will quickly become a $16,000 reward. The scheme is operating under several names, including a recent one called the "Fast Track University" in the Winner area. Regardless of the name, the basic concept is the same. One consumer is asked to "give" money and then recruit others to "give." In return, the consumer is promised a reward for those efforts. Promoters of the schemes claim that they are legal under State and Federal law. Those assertions are not true.

"I want South Dakotans to be aware that if they do participate with the intention of getting money back, their money is not the only thing they are putting at risk," Barnett said. "We have prosecuted several individuals and will continue to do so if necessary."

Barnett’s office has prosecuted several people throughout the State. State’s Attorneys in Brown County and Pennington County have prosecuted individuals involved in the scheme as well.

Barnett warns South Dakotans not to be swayed by promises of big returns for a smaller up-front gift or donation. Generally, those at the top of the pyramid make money, while most experience disappointment and a loss of several thousand dollars. Promoters of the "clubs" also risk their reputation and friendships with the unhappy recruits who lose money when the scheme collapses, as all pyramids do.

Consumers with questions or complaints about gifting clubs/pyramid schemes are encouraged to call Barnett’s Division of Consumer Protection at 1-800-300-1986.