Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, February 13, 1994 TAG: 9402130127
SECTION: VIRGINIA PAGE: D5 EDITION: METRO
SOURCE: Associated Press
DATELINE: VIRGINIA BEACH LENGTH: Medium
According to pamphlets issued by "Friends Helping Friends," it's just a series of gifts to friends.
Since it surfaced in Franklin and Southampton County about two months ago, the scheme has quickly spread to Suffolk and parts of Chesapeake. During the last week, it spread to Portsmouth and Virginia Beach, and possibly into North Carolina and the Eastern Shore, police said.
It has grown so large that it will soon collapse, police said, leaving hundreds or even thousands of investors empty-handed.
"There's a diminishing pool of resources, and eventually somebody's going to get stuck," said Chesapeake Commonwealth's Attorney David L. Williams.
People who have invested in the plan told The Virginian-Pilot and The Ledger-Star newspaper that it involves a four-tier "triangle" of 15 people. One person is on the top row, then two, four, and finally eight at the triangle's base. The person in the slot at the top holds a meeting, usually billed as a "party," and gets a $12,000 payoff when eight people agree to pay $1,500 each for the bottom slots.
Then the "pyramid," as police call it, splits, and the process starts again. The two people who were on the second level move to the top of two new triangles, and get their own $12,000 payoff when eight new members pay to join.
Promoters typically tout the scheme as a legal way to make a lot of money. But police said anyone involved is guilty of fraud.
Under state law, participating in a pyramid investment scheme is a misdemeanor carrying a maximum penalty of a year in jail and a $2,500 fine.
by CNB