With Friends Like These …Women Guilty Over Pyramid Scheme

Rita Lomas, left, and Jane Smith promoted a get-rich-quick pyramid scheme

A group of "greedy" women masterminded a £21 million get-rich-quick pyramid scheme, Press Association reports

The group encouraged around 10,000 vulnerable women to "beg, borrow or steal" £3,000 to put into the scheme between May 2008 and April 2009.

Victims were lured by the promise they would receive a £24,000 payout when they reached the top of their pyramid, with organizers promising they "could not lose".

The scheme, called Give and Take, quickly spread from Bath and Bristol to Gloucester, Bridgwater, Cheltenham, Torquay, Weston-super-Mare and Wales.

Committee members behind the scheme pocketed up to £92,000 each, while as many as 88% of the women they recruited lost out - some up to £15,000.

The scheme, also known as Key to a Fortune, was hidden under a veil of secrecy as members were banned from writing about it, Bristol Crown Court heard.

But the pyramid was uncovered by authorities when a disgruntled employer in Bristol contacted Trading Standards to complain that it was being promoted in his workplace.

Eleven women, aged between 34 and 69, became the first to be prosecuted for such a scheme, under new legislation in the Consumer Protection from Unfair Trading Act 2008.

Following two lengthy trials, in 2012 and 2013, three were convicted of the charges against them, three pleaded guilty, one was acquitted and two juries could not reach a verdict on another.

A third trial - a retrial of three women a jury could also not reach verdicts on - was due to begin at Bristol Crown Court on Wednesday but the defendants entered guilty pleas before a jury was sworn.

Reporting of the case was banned until the conclusion of all trials and lifted this morning following legal representation from the three women and the media.

Judge Mark Horton will sentence the three women, charts co-ordinator Mary Nash, 65, committee secretary Susan Crane, 68, and games coordinator Hazel Cameron, 54, in October.

Nash, Crane and Cameron all admitted operating and promoting the pyramid scheme.

Sally Phillips, 34, of Hengrove, Jane Smith, 50, of Bishopsworth, both Bristol and Rita Lomas, 49, of Whitchurch, Somerset admitted promoting the scheme in 2012.

Phillips received a three-month suspended prison sentence, Smith a four-month suspended sentence and Lomas a four-and-a-half month suspended sentence.

Chairman Laura Fox, 69, Jennifer Smith-Hayes, 69, and Carol Chalmers, 68, were convicted of operating and promoting the scheme during a trial in 2012.

Fox, of East Harptree, Smith-Hayes of Bishopsworth and Chalmers, of Weston-super-Mare, were sentenced to nine months' imprisonment.

No verdict was reached following two trials of Tracey Laurence, 60, of Bradley Stoke, South Gloucestershire, while Rhalina Yuill, 34, of St George, Bristol was acquitted of promoting a pyramid scheme on her second trial.

Judge Horton, speaking as he lifted the order today, said the public had to be aware of the dangers of pyramid and chain gifting schemes.

"These cases and the actions and attitudes of these defendants demonstrate the way in which pyramid promotional schemes and chain gifting schemes can be secretly created and quickly spread amongst a vast number of people and over several counties," Judge Horton said.

"This particular scheme caused a loss to the general public of around £19 million."

Judge Horton said the scheme targeted vulnerable women who could ill afford to lose the money.

"A number of these women suffered enormous and in some cases lifelong financial hardship due to their involvement in this scheme," he said.

"The public need to be aware that schemes like this lead to the destruction of lifelong friendships and families and in some cases whole communities as friends and family are lured into such a scheme."

Judge Horton said 88% of those who entered the scheme would lose their money.

"It is important now that the full matter of risks of this type of scheme are exposed and made known to the public," he added.

"If it looks to good to be true, that's because it is not true."

During the trials, the two juries were told how the scheme operated around pyramid charts that had 15 spaces on.

Each space was filled with a participant who paid £3,000 and introduced two friends, who also paid that amount.

Once the chart was filled, the eight people on the bottom of the chart paid their £3,000 to the person on the top, called the "Bride".

Participants collected their winnings at specialist prize-giving pamper parties, where they would be asked a series of simple questions before being handed the £24,000.

A set £1,000 fee from the payout was deducted, with £600 shared between charities and £400 used to pay costs the committee occurred.

Miles Bennett, who prosecuted both trials, said potential recruits were invited to the parties at the Battleborough Grange Hotel in Burnham-on-Sea, owned by Carol Chalmers.

The "champagne evening celebrations" were attended by up to 300 people, who paid £2 entry for games and drinks.

Mobile phone footage recorded at one of the parties showed Laura Fox shouting: "We are gambling in our own homes and that's what makes it legal.

"This is Carol's home, we have been friends since we were 11-years-old. We are going to do these games, that's what makes it legal and tax free."

After games were played, the winnings were handed over to the Brides at the top of their charts in cash - with as much as £240,000 handed out in one evening.

But Mr Bennett said the celebration evenings were a "commercial practice", with the committee holding meetings and entrants writing their names on a signing in book before entering.

"This wasn't a bunch of ladies sitting around playing bridge," Mr Bennett said. "This was a committee and Laura Fox ruled those nights with a rod of iron."

"This wasn't a kitchen hobby, this was a scheme that sucked a lot of people and which worked on the promise of them receiving riches way beyond their initial investment."

Minutes from meetings show the committee required disposable cups for champagne and expressed concerns about attendees' chewing gum.

There was "sheer indignation" that a Bride expected to bring champagne to celebrate her payout had brought cava instead, Mr Bennett said.

"What was being operated from May 26 2008 to April 29 2009 was a pyramid promotional scheme where people were invited to give £3,000 with the promise they would receive £24,000," Mr Bennett said.

"Wouldn't it be wonderful if life was that simple? But it's a bit of a scam.

"It needs more and more people to be investing. To join a scheme you need two people who can in turn invest £3,000.

"It is usually recognized that 12 to 18% are winners and 82 to 88% are losers. They simply do not work.

"It is clear that, blinded by the possibility of riches and quick bucks, people were quite prepared to ignore the bleeding obvious pitfalls of a pyramid scheme."

Alex Chisholm, chief executive of the Competition and Markets Authority (CMA), which brought the prosecution, said the case would be a "warning for consumers".

"As the convictions make clear, pyramid selling schemes where money is generated primarily by recruiting new people to join in, are illegal and criminal," Mr Chisholm said.

"Anyone thinking of organizing or promoting such a scheme risks a criminal record and a spell in prison.

"The case will be a warning for consumers. The vast majority of consumers stand to lose their money from such schemes. The adage remains, that if it sounds too good to be true, it probably is."

Sarah Davey, principal trading standards officer of Bristol City Council, South West Scambusters, which referred the case to the CMA, added: “I welcome these convictions.

"Pyramid promotional schemes, such as 'Give and Take', are intrinsically unsustainable and doomed to collapse, resulting in significant loss of money for the vast majority.

"Rightly, such schemes are banned outright and the convictions have confirmed that Give and Take was an illegal scheme."