this really works$$$$$$

Peter J. BRYANT PJBRYANT at UCI.EDU
Wed Oct 23 01:22:20 EST 1996


Pyramid Schemes



What is a Pyramid Scheme?

Have you ever received a chain letter that asked you to mail one dollar to the 
top person on the list and to send the letter to 10
friends? If so, you were solicited for an illegal pyramid.

Pyramid schemes are illegal money-making ventures for individuals, businesses, 
and small groups of people. A typical pyramid
scheme involves a few individuals at the top who recruit participants who, in 
turn, recruit other participants to offer something
of value (usually money, but in some cases, time) to the organization. Recruits 
are offered the promise of large sums of money
if they successfully bring in others to pay money to join the pyramid. Pyramid 
schemes focus on the exchange of money and
recruitment. Usually, there is no legitimate product being sold.



How are Pyramid Schemes Disguised?

Pyramid schemes may be disguised as games, chain letters, buying clubs, 
motivational companies, mail order operations, or
investment organizations. Although some pyramid schemes call themselves 
multi-level marketing operations, not all multi-level
marketing companies are pyramids. The sale of legitimate products is what 
distinguishes multi-level operations from pyramids.
When the emphasis is on recruiting new members rather than selling something of 
value the organization is probably an illegal
pyramid.



How do Pyramid Schemes Work?

Basically, a pyramid scheme is formed when a single promoter (or small group of 
promoters) collects money from a certain
number of "friends" and instructs them to collect more money from more of their 
"friends." The cycle goes on from there. As
the pyramid grows, the number of people involved becomes too large to sustain 
the pyramid. Some people will fail to send in
their money, or recruit the required number of "friends," and the pyramid 
crumbles. The majority of people end up on the
"bottom" of the pyramid and inevitably will lose their initial "investment." 
They won't get their money back or earn their
promised fortune because no one is beneath them in the pyramid adding new money 
to the pot.



Why do Pyramid Schemes Fail?

Pyramid schemes collapse when a few people drop out or refuse to pay, and new 
members are not recruited in their place. In
order for a pyramid scheme to profit, there would have to be a never-ending 
supply of potential (and willing) participants. In
reality, however, the supply of participants is limited, and each new level of 
participants has less chance of recruiting others and
a greater chance of losing money.



How a Typical Pyramid is Organized

A simple pyramid - for example, a five level program built on recruitment by 
fours - might work like this:

     A new recruit would pay $100 to "join" the organization.

     That money would then be disbursed at regular intervals by the company - 
$25 to the recruiter, $25 to the company,
     and $50 to the recruiter's "upline" in the form of $10 payments to the 
recruiter's recruiter, and so on through five levels.

     The new recruit would recover the $100 "fee" by recruiting four more 
people, each of whom would pay the recruiter
     $25.

     From this point a participant would then make money from all recruiting 
done by the four recruits and their recruits.

     Assuming successful recruiting by four people down through each of five 
levels, a participant could (but probably never
     will) make a cumulative total of $54,560:

        1.$160 on the first level - e.g., four people each recruiting four 
others at $10 a person (4x4=16x$10=$160); 
        2.$640 on the second level - e.g., 16 people each recruiting four 
persons at $10 each (16x4=64x$10=$640); 
        3.$2,560 on the third level (64x4=256x$10); 
        4.$10,240 on the fourth level (256x4=1024x$10); 
        5.$40,960 on the fifth level (4x1024=4096x$10). 



Pyramid Reality

Pyramids are illegal. Because pyramid sales plans are by their very nature 
deceptive, they are illegal. There is a real risk that a
pyramid operation will be closed down by police and the participants subject to 
fines and possible arrest.

Pyramids are deceptive. Participants in a pyramid, whether they mean to or not, 
are deceiving those they recruit. Few would
pay to join if the odds stacked against them were fully explained.

Pyramids are losers. Pyramid Schemes are based on simple mathematics: many 
losers pay a few winners.

Pyramids inevitably collapse because it is mathematically impossible to recruit 
the numbers of people required to support the
pyramid. A nine-level pyramid, which is built when each participant gets six 
"friends" to join, would involve over ten million
people!

                                               6
                                               36
                                              216
                                              1,296
                                              7,776
                                             46,656
                                             279,936
                                            1,679,616
                                           10,077,696



Why Would Anyone Pay to Join a Pyramid?

Pyramid promoters are masters of group psychology. At recruiting meetings they 
create a frenzied, enthusiastic atmosphere
where group pressure and promises of easy money play upon people's greed and 
fear of missing a good deal. It is difficult to
resist this kind of appeal unless you recognize that the scheme is rigged 
against you.



Multi-level Marketing Companies

Multi-level marketing companies differ from pyramid schemes because they are 
usually legitimate business opportunities. The
sale of legitimate products is what distinguishes multi-level marketing 
operations from pyramids.

If the emphasis in a multi-level marketing company is to build a sales force 
rather than sell the company's products, it may be
an illegal pyramid.



The Difference Between Pyramid Schemes and Multi-level Marketing

Many pyramid promoters attempt to make their schemes look like a multi-level 
marketing company by using a line of
near-worthless products or newsletters and claiming to be in the business of 
selling them. In pyramid schemes, little or no effort
is made to actually market the products. Often there is not even an established 
market for the products. Rather the "sale" of
such merchandise is used as a front for the transactions which occur only among 
and between the operation's distributors.

In pyramid schemes, the emphasis in the sales pitch is on recruiting - building 
up the organization and the number of
participants and on collecting the "start up" fee - not on selling the products.
Pyramid schemes want to make money from you,
not the product sales.

Pyramid Scheme vs. Multi-level Marketing

Compensation based on recruiting vs. Compensation based on sales

Few or no sales to consumers vs. Sell legitimate products to established markets

Substantial start-up costs vs. Generally small start-up fee

Potential to be stuck with large amounts of unsold goods vs. Will buy back 
unsold goods if you decide to quit the business

Make money from you vs. Make money with you



Protect Yourself

     Take your time. Don't be rushed into any business deal. Show your attorney 
any contracts you receive from the
     company. A legitimate business opportunity won't disappear overnight.

     Ask questions about the competency and experience of the company and its 
officers; the products, including the
     potential market in your area; start-up fees; buy-back provisions; and 
actual earnings of current distributors.

     Get written copies of all available company literature.

     Check with others who have experience with the company and its products. 
Find out if the products are actually being
     sold to consumers.

     Investigate and verify all information. Contact the Division of Consumer 
Protestion, your local Chamber of Commerce,
     or the Better Business Bureau if you suspect a company may be engaged in an
illegal pyramid scheme.

     If a pyramid promoter or recruiter tells you that the program has been 
examined and approved by the Division of
     Consumer Protection or any other state agency, know that the claim is not 
true! The Utah consumer Protection does
     not approve any marketing programs. If such representations are made to 
you, please notify the division at 530-6601.



For Further Information:
Division of Consumer Protection Utah Department of Commerce 160 East 300 South 
Salt Lake City, Utah 84145 (801)
530-6601 (800) 721-7233



                              This Document last updated April 09, 1996 



______________________________ Reply Separator _________________________________
Subject: Re: this really works$$$$$$
Author:  r947751 at EDU.TUTCC.TUT.AC.JP (GOGONEA CAMELIA) at biosmtp
Date:    10/22/96 5:42 PM


Taking 5 minutes to read what follows can change your life :

Read this testimonial:

  "I saw an article in an internet newsgroup telling me I could 
  make $50,000 within a month for an investment of only $5.

  I thought it  was a huge joke. I spoke  to my wife, attorney 
  and friends about  it, and they all agreed it  was some kind 
  of scam. I  can't stand scams, because  usually someone gets 
  burned, and I didn't want it to be me. Of course, I rejected 
  the idea at  first. after a short period of  about two weeks 
  ,I thought  : "I have already  heard of such things.  But on 
  the Internet ?!?!? ". I decided  that even if I had to throw 
  5$ into the fire, I wouldn't  mind it that much, and gave it 
  a try .After all I needed a LOT more than five dollars.


  Two weeks  later, I began  receiving money in  the mail!   I 
  could not believe it! Soon, hundreds,  and then thousands of 
  dollars began to  roll in. Within 4 weeks, I  had received a 
  total of $32,445!  It came from everywhere in  the world. My 
  bank account has changed its "-"  into a big "+" (++++)!!!,I 
  bought myself a car and things I wanted for a long long time 
  for my wife and kids!"

IT CAN HAPPEN TO YOU!

  If you follow the three steps  below, there is no reason why 
  the  same shouldn't  happen  to you!  This  is a  legitimate 
  investment  opportunity. You  invest $5,  and you  receive a 
  return on  your investment. So  does the next  investor. NOT 
  ILLEGAL, NOT A CHAIN LETTER- PERFECTLY LEGITIMATE.

  If  you  are not  interested,  then  don't participate,  but 
  please print this article and pass  it on to someone who may 
  be interested, so they can take advantage.

  The procedure is simple: 1) Write your name and address on 5 
  sheets of paper.   Below that, write the  words, "Please add 
  me to  your mailing  list." Fold  $1 note  or bank  draft or 
  money order  in each  piece of  paper and  mail them  to the 
  following 5 addresses.:





  1.  Scott McMoran
      19 Botany Circle.
      Willingboro, NJ  08046    USA

  2.  Jeremy Anderson
     2901 Birnam Wood Apt #611
     Bellingham, WA 98225   USA

  3. Jim Wilson
     4101 Green Oaks Blvd. W. #242
     Arlington, TX 76016   USA

  4. russ copeland
     19360 s. henrici rd.
     Oregon city Or. 97045

  5.  Camelia Gogonea
      Toyohashi University of Technology
      International House, Room B-101
      Tempaku-cho, Toyohashi 441, JAPAN
                                                                                ?
      


  2) Now remove the top name from the list, and move the other 
  four names up. In other words,  #5 becomes #4 and so on. Put 
  your name as the  fifth one on the list.   Use a simple text 
  editor such as  Notepad,  in your   "accessories" window (If 
  you have  MS-Windows),or DOS  editor.   In fact,  any editor 
  will do.

  3) Post  the article to at  least 200 newsgroups.  There are 
  17,000, so  it shouldn't  be hard  to find  that many.   Try 
  posting to as  many  newsgroups as you can,   and the bigger 
  the newsgroup is,  the more  people are to see your message!

  You  are now  in  the mail  order  investment business,  and 
  should start seeing returns within a week or two. Of course, 
  the more newsgroups you post to, the greater your return is. 
  If you  wish to remain anonymous,  you may use  a psuedonym, 
  call yourself  "The Manager", "The Boss",  whatever but make 
  sure your address is correct.

  Now, here is why the system works:

  -Of every  200 posts  I made, I  received 5  responses. Yes, 
  only 5. You make $5 for every 200 posts with your name at #5.

  -Each person who  sent you $1 now also  makes 200 additional 
  postings with your name at #4. ie. 1000 postings. On average 
  therefore, 50 people will send you  $1 with your name at #4. 
  $50.

  -Your 50 new agents make 200 postings each with your name at 
  #3 or  10,000 postings.  Average return  500 people  = $500. 
  They make  200 postings  each with  your name  at #2=100,000 
  postings=5000 return at $1 each=$5000.

  -Finally, 5,000 people  make 200 postings with  your name at 
  #1 and  you get a return  of $50,000 before your  name drops 
  off the list. AND THATS IF  EVERYONE DOWN THE LINE MAKES 200 
  POSTINGS! Total income in one cycle=$55,000.

  From time to  time, when you see your name  no longer on the 
  list,  you  take the  latest  posting  that appears  in  the 
  newsgroups, and  send out another $5,  and put your  name at 
  #5, and start posting again. Remember,  200 postings is only 
  a guideline. the more you post, the greater the return.

  Lets review why you should do this. THE ONLY COST IS $5, AND 
  5 STAMPS, AND 5 ENVELOPES.  Anyone can afford $5 for such an 
  effortless investment with such SPECTACULAR RETURNS.

  Some people have said to me,  "what happens if the scheme is 
  played out and no one sends me any money?  "Big Deal, so you 
  lose $5-but what are the chances of that happening ?? Do you 
  Realize that  NOBODY cares for  the LEGAL chance  of winning 
  such  a BIG  money as  50,000.00  $$$$ ????  and  all for  a 
  microscopic investment of five  separate dollars? just think 
  of all  of the new  Internet users that  join the  net every 
  day!!!

  There are  millions of internet  users, and millions  of new 
  net surfers every  month !!!  This is the  great plus of the 
  Internet,  people all over the world can hear you and listen 
  carefully if you  talk reasonably.  Everyone  will take that 
  chance !  I agree,  If  it wasn't the  Internet,  and  was a 
  small circle  of people,  the chance  wouldn't have  been so 
  small.  the amount of money had to be 200 times bigger,  and 
  the chances were zero.  It wouldn't succeed.

  But here, on the Internet, it is a giant village,  where new 
  thousands of members join in every day ! you CAN'T lose !!!!

  Remember- read the instructions  carefully, and play fairly. 
  That's the  only way this will  work. Get a printout  so you 
  can refer back to this article easily.

  Try to  keep a  list of  everyone that  sends you  money and 
  always keep an eye on the  postings to make sure everyone is 
  playing fairly. You know where your name should be.

  REMEMBER-HONESTY IS  THE BEST  POLICY.  YOU  DO NOT  NEED TO 
  CHEAT THIS  IDEA TO  MAKE MONEY!!   BESIDES,NOT  PLAYING THE 
  GAME  FAIRLY  IS ILLEGAL.SO  LET'S  BE  REASONABLE AND  PLAY 
  FAIRLY,SO WE CAN ALL ENJOY THE INTERNET GOLD MINE.

  GOOD LUCK  FOR YOU ALL, And  remember, play fair  and you'll 
  win,  I don't want to mention what might happen to those who 
  won't.   AND  AGAIN,SEE  YOU NEXT  TIME  WITH SOMETHING  YOU 
  WANTED FOR A LONG TIME !!!






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