North County Pyramid Scheme Results In $100,000 In Fines

Attorney General Spitzer said today that twelve North Country women have paid substantial penalties for their roles as leaders of an illegal pyramid scheme.

The Attorney General began investigating the pyramid scheme, commonly known as the "Women's Gifting Circle" or "Women's Gifting Tree," in late 2000 after receiving numerous calls concerning the enterprise. Most of the calls came from anxious women who had lost substantial sums of money in the scheme.

On its surface, the Women's Gifting Circle ("WGC") purported to be a means by which women could support other women in need. WGC was described in written promotional material and orally by its proponents as a way for women to pool their resources to redistribute the wealth in the nation to empower women.

"Pyramid schemes are destined to collapse under their own weight and leave too few winners and scores of losers," Spitzer said. "This scheme was particularly disturbing because it hurt the very people it was supposed to help - working women."

The structure of WGC was typical of pyramid schemes and used a tree structure to define its three levels. The bottom level consisted of nine women who each paid $1,000 to become "leaves." The middle level consisted of three women, referred to as "branches," and the top level consisted of one woman, the "trunk," who received the $1,000 from each of the nine leaves.

If the branches found nine leaves to each contribute $1,000, the tree would split into three new trees, with new branches recruiting new participants to keep the pyramid going.

"As with all pyramid schemes, however, it did not take long for the supply of women willing to participate to be exhausted," Spitzer noted. "Once that happened, many of the women lost their investment when the tree collapsed."

The Attorney General's investigation determined that WGC was introduced to the North Country in late July 2000 by Lake Placid resident Jennifer Borzirelli Ledger, who had participated in a similar scheme in Colorado. Ledger then promoted WGC amongst her friends and acquaintances. By August 2000, participation had increased dramatically in Lake Placid and quickly spread to Saranac Lake and Tupper Lake.

New investment in the pyramid dried up quickly, however, after it was reported by local newspapers in late October 2000 that the Attorney General had advised that WGC was illegal.

The following individuals have each entered into settlements with Attorney General Spitzer calling for payment of the listed penalties:

  • Eileen Beglin, Lake Placid, NY, $7,000.
  • Mary Blair, Lake Placid, NY, $4,500.
  • Mary Ellen Decker, Saranac Lake, NY, $8,000.
  • Susan P. Dwyer, Saranac Lake, NY, $1,000.
  • Lisa G. Grigoriadis, Lake Placid, NY, $9,000.
  • Joanne Hesseltine, Saranac Lake, NY, $8,000.
  • Elizabeth Hudak, Lake Placid, NY, $13,500.
  • Holly Kostoss, Ausable Forks, NY, $6,000.
  • Jennifer Borzilleri Ledger, Lake Placid, NY, $20,000.
  • Colleen Locke, Lake Placid, NY, $9,500.
  • Candy Merit, Lake Placid, NY, $4,000.
  • Kerry Raferty, Lake Placid, NY, $7,500.

Pyramid or "chain distributor" schemes have been illegal in New York State since the early 1970s with both civil and criminal penalties for participants. In addition, all participants in WGC may face substantial penalties, interest, and possible criminal sanctions if they do not report earnings associated with participation in WGC or any other pyramid scheme on their state and federal income tax returns.

This case was handled by Assistant Attorney General Glen Michaels and Senior Investigator John Phillips of the Plattsburgh Regional Office.