Gifting clubs are a type of fraudulent money making operation that have become popular in recent years. The "gifting club" is a private club that often begins in neighborhoods, churches, or similar small communities. New members give cash "gifts" to high ranking club members in order to join. They are promised that if they get new members to join the club, they will rise in the club's ranks and earn more money than they paid to join the club.
In reality, the clubs are illegal pyramid schemes. As the club grows, it must attract more and more new members to continue making payouts. Eventually, the club cannot attract enough new members to survive, and it collapses. Most club members never receive their expected payout, and in addition, they lose their entire investment.
How Do I Know If I am Getting Involved in a Gifting Club?
- In order to seem more legitimate, many clubs have names suggesting benevolence, friendship, and charity. Some examples of recently exposed gifting club scams have had names like "The Season of Giving", "Women Empowering Women", and "The Friendship Investment Club".
- Clubs often have a themed heirarchy of members. One example is the "airplane club", where a new member buys into the club as a "passenger" and moves up in the ranks to eventually become a "pilot".
- Clubs sometimes try to convince investors that money earned is a gift, and therefore does not have to be reported to the IRS as income. (This is a means of keeping the club secret from authorities).
What Should I Do If I Have Been Charged With Involvement in a Gifting Club?
Being involved in a gifting club at any level can be considered a form of criminal fraud. If you are charged with involvement in such an organization, you should contact a criminal defense attorney. An attorney with experience in fraud issues will help to explain the law, and any defenses that may be available to you.
What Should I Do If I Have Been the Victim of a Gifting Club?
If you think that you have been the victim of a gifting club scheme, you should contact the police or the Federal Trade Commission immediately. Gifting clubs are a form of pyramid schemes, which are criminal fraud. You should also contact a criminal lawyer experienced in criminal fraud matters. He or she can help you take steps to recover your lost investment.