June 7, 2002                                                         Contact:Lucas Hamilton

Pyramid participants to help State Auditor with investigation


      Great Falls residents Heidi Wadsworth and Georgia Wadsworth each have agreed to assist the State Auditor's Office in its investigation of an illegal pyramid scheme, and pay restitution and a $5,000 administrative fine with all but $500 suspended, in a consent agreement with the State Auditor's Office involving their alleged involvement in a pyramid scheme.
      In May, State Auditor John Morrison issued a cease and desist order against the Wadsworths for their participation in the gifting program Women Helping Women. Gifting programs are pyramid schemes that are specifically outlawed by state law.
      "We are pleased with the timely resolution of this matter and appreciate that Heidi and Georgia have agreed to cooperate with our efforts to stop this illegal activity in Montana," said Morrison, Montanan's Securities Commissioner. "There is a finite number of people available for recruitment into these programs and we need to shut them down before more Montanans are cheated out of their hard-earned income."
      Pyramid schemes are fraudulent because nothing of value is purchased or sold when a person joins the program. Rather, the money is "recycled" to existing program participants. Continuation of the program is dependent upon new recruits. Eventually, the pool of people available for recruitment dries up and the pyramid collapses so the people on the lower pyramid tiers never get their money back, let alone make a profit.
      The Women Helping Women pyramid consists of four levels. There are eight spots on the fourth level, four on the third level, two on the second and one on the first. The individual or individuals on each spot of the fourth level were to provide $3,000 (for a total of $24,000) to the person or people on the first level. The first level disappears after the money is exchanged and the pyramid splits in two. The two spots on the second level become the top level of two separate pyramids. The goal at that point is to recruit participants to donate $3,000 for spots on the bottom level of each of the new pyramids.
      The May 6 cease and desist order alleged that Heidi Wadsworth held a recruitment meeting in her home with 80 to 100 women in attendance. Some individuals gave money to the program and later asked that it be returned, but their funds were not returned as requested. The order stated that because the people being recruited by the women were expecting compensation as a result of joining, and that no products or services had been exchanged, the program was a pyramid scheme.
      The Wadsworths have agreed to repay all funds they received through their participation in Women Helping Women. They agreed to assist the State Auditor's Office with its investigation of the program, which includes testifying at any proceeding regarding any matter in which they may have information and providing names of other participants.
      They did not admit to the allegations in the cease and desist order, but waived their right to an administrative hearing.
      "As I have said, we do not plan to prosecute every single pyramid scheme participant," Morrison said. "We want to protect Montana consumers from becoming victims of fraudulent activity so we do intend to stop individuals who promote and lead recruitment efforts."
      Anyone with information about gifting programs or questions about other investment opportunities should call the State Auditor's Office at 1-800-332-6148.