State Cracks Down on (most) Fraudulent Pyramid Schemes

by Dan Steninger

Congratulations are in order for Nevada Secretary of State Dean Heller for cracking down on various pyramid schemes making the rounds in Nevada. The schemes operate by promising a big payoff for an investment; but the catch is a person has to make sure enough new “investors” are brought in to fund his payoff. Hence the term pyramid, since the base needs to keep getting larger in order for the earlier participants to get back more money then they put in. Eventually, the scheme collapses when not enough new suckers are available to keep the operation going.

According to the Associated Press: “The scheme operates under a variety of names, including investors’ clubs, friends-helping-friends networks and the Unconditional Giving Matrix…

“Participation is illegal under the Uniform Securities Act of Nevada and is classified as a felony with fines up to $20,000 and prison terms of one to five years, Heller said.”

Heller told the AP his office is getting a lot of calls about the schemes. “My first instinct is to tell people to get out and get out fast. If they lose $2,000, chalk it up as an educational experience.”

That’s darn good advice, and we’d really like to take it. But we can’t.

These pyramid schemes have bothered us for a long time, mainly because we’ve been participating in one for the past 20 years; and we’d really like to call it quits. We’re getting kind of tired of making “investment” after “investment” and seeing not a dime of it come back. In fact, we think we’ve been tricked and there never will be a payoff. Our employer is even a bigger sucker than we are. While we pay 6.2 percent of our paychecks into the pyramid scheme every other week, in hope of some day getting our money back and then some, the company matches our contribution and isn’t even promised a return. What fools!

So we appreciate Heller’s advice, but if we were to quit making our biweekly contribution of 6.2 percent of our paychecks, the federal government would come in and take away our house. That’s because the pyramid scheme that we’ve been participating in since we got our first jobs is run by the government.

And we were never even given a choice of whether we wanted to participate. While Dean Heller says such participation amounts to felonious behavior that could land us a five-year stretch in the state pen, the federal government, which commands more tanks and artillery than the Secretary of State of Nevada, says it’ll come get us if we quit the investment club it has been running, taking money from us and our colleagues and giving that money to people who got into the “Unconditional Giving Matrix” before we did, and are now collecting their booty in the form of Social Security checks. They’re the lucky ones, the ones on the top of the pyramid. We realize the scheme is running out of new suckers to recruit, but there’s nothing we can do about it.

So, thanks for the advice, Mr. Heller, but we think we’d better keep playing along until this little friend-helping-friend network is shut down by a more conservative Congress — one that will not throw us in the pokey if we were to take the radical, right wing, extremist step of taking care of ourselves.

Dan Steninger is editorial page editor at the Elko Daily Free Press.

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