Speakin 'o gold, BWA HAHA: "Authorities Confront ''Gifting Club''
By AMY WESTFELDT
SOMERSET, N.J. (AP) - The gifting has begun at the Amigos Associates Social Club.
Eight people line up in front of their team captain, pulling out wads of $100 bills. They
each count 20 bills into their captain's hands. The captain walks away with $16,000,
and the donors think that in a month or so, they will too.
''If this is a scam, I cannot wait to be scammed again,'' organization leader Linda
Shepard told 2,000 people Thursday night at the Garden State Exhibition Center.
Shepard's ''gifting club,'' which started six months ago with 13 people and has grown
to 3,900 members, relies on the recruitment of new investors to pay people at the top.
Some state officials argue it's a simple pyramid scheme, a consumer fraud that
eventually collapses when longtime members run out of new recruits.
But membership comes with a key caveat: recruits must read a statement saying they
are offering $2,000 as a gift - and expect nothing in return.
''It's carefully worded,'' said Union County prosecutor Robert O'Leary. ''It's not a
crime to operate what that group is operating right now.''
Prosecutors began investigating the club this month after learning that six Plainfield
police officers allegedly tried to solicit business for the club while on duty.
Connecticut officials are also looking into whether an offshoot of Amigos is holding
similar meetings near Greenwich and Stamford, Conn.
Two assemblymen introduced a bill this week that would make it illegal to participate in
a group where an investor needs to recruit many others in order to reap a windfall. The
measure might make Amigos Associates easier to prosecute, officials say.
Shepard, a 36-year-old church musician and record store owner, is baffled by the
attention. She says she didn't know what a pyramid scheme was before prosecutors
began their investigation.
''They're making me out to be much smarter than I really am,'' she said.
Shepard said the club does more than enrich its ranked members: ''We give money to
charities. We help inner-city programs.''
But Amigos does generate cash for its members, who are now so numerous that they
meet in huge exhibition halls around the state three times a week to move up the ladder
on the club's gifting ''ships.''
Each ship has a team captain, two superstars, four all-stars, and eight stars. The stars
each pay $2,000 to the captain, who then retires. Everyone else moves up a rung on
the ladder and tries to recruit new stars.
After collecting, the captain makes a $500 donation to cover expenses and pay
Anova-Tau Inc., Shepard's for-profit corporation. Members can drop out at any time
and get their money back, as long as they find a replacement donor.
Millions of dollars in cash exchange hands on some nights. Guards check people at the
door for weapons, and cameras are banned. Club members were eager to speak out
in support of Amigos but reluctant to give their full names, saying they worried about
their privacy.
After two weeks, an investor who would only identify himself as Joe said he is one step
away from being a team captain. He decided to join after coming to a meeting and
watching 80 people collect $16,000 each in one night. He took his $2,000 out of a
brokerage account.
''I get a better return on my money here,'' he said.
Melissa, 28, has been on a team for two months and hasn't cashed out, but isn't
worried.
''I play the stock market. I go to Atlantic City,'' she said. ''That's throwing money
away. This is an opportunity that's going to happen.''
Shepard, who said she has made about $40,000 as a team member, said she isn't sure
how many members have multiplied on their investments. On average, it takes 30 to 40
days, she said.
''It's not get rich quick. It's just get rich,'' she said. ''This takes time and this takes
effort, and you have to work with your team.''
AP-NY-06-26-99 0227EDT |
