Washington State

Office of the Attorney General

Attorney General

Bob Ferguson


Pasco -March 1, 2000- Washington Attorney General Christine Gregoire today filed a lawsuit against 13 promoters of Renewal Celebration, a large-scale illegal pyramid scheme operating out of the Tri-Cities.

The lawsuit stems from a Renewal Celebration meeting in Kennewick last September. Plain clothes police officers estimate as many as 1,800 people attended and as much as $2.1 million was put in circulation during the evening. The officers broke up the meeting and with court authorization seized various records and about $50,000.

Pyramid schemes are an old consumer fraud and have been reappearing recently in Washington State.

"Pyramid schemes are illegal," Gregoire said. "People are enticed to join in with the promise they will get more cash back than they contribute, but the reality is, the vast majority of the people involved lose everything they invest."

Benton County Prosecutor Andy Miller endorsed the filing of the lawsuit stating, "Even after money and records were seized from the committee, they simply moved their illegal scheme outside Benton County. The Attorney General’s action is exactly the step needed to attack this problem on a statewide basis."

Gregoire praised the efforts of Benton County law enforcement officials in investigating the Renewal Celebration. She said the lawsuit is a cooperative effort between her office, the Benton County Prosecutor’s Office, and the Kennewick and Richland police departments.

Kennewick and Richland detectives conducted an extensive investigation and attorneys from Gregoire’s office prepared the lawsuit, which alleges violations of the Consumer Protection Act and Chain Distributor Schemes Act.

Gregoire said the 13 defendants formed a committee to promote illegal pyramid games under the guise of "gifting" programs. Since pyramid schemes are illegal, many operators today are labeling them as gifting groups or clubs, often with family, church or self-help themes. The defendants have previously used the names "Northwest Gifting," "Friends and Family," "Northwest Family," and "Jubilee Celebration."

"These 13 individuals have cloaked their scheme in feel-good words like gifting and renewal celebrations, but it is nothing more than an age-old scam that separates a lot of people from their money," Gregoire said.

The lawsuit seeks to stop the defendants from operating pyramid schemes, pay restitution to those who lost money, pay civil penalties of up to $2,000 per violation and reimburse the state for legal fees.

The state’s lawsuit contends the defendants invited people to attend the Renewal Celebration and participate in "boards" or "reports." In a typical board, eight individuals would be recruited to join seven existing members in a 15-member board. The board is registered by event organizers in a pyramid configuration, with the eight new recruits at the bottom, four members above them, two more at the next level, and a single person at the head of the board.

The eight new recruits would each pay $2,000 to the person at the head of the board. The top person then moves off the board with $16,000 cash. The board is then split in half, with the two people who were on the second tier now moving to the top of the new pyramids. The two new boards now must recruit eight new members, so it takes 16 people to pay off the top two people.

Organizers also ran seven-member pyramids which required an investment of $6,000 and pay $24,000.

Gregoire said people who get in first are usually the only ones who make money because the deeper you go into a pyramid, the harder it is to find new participants.

"The 13 defendants we have sued today are perpetuating a fraud," Gregoire said. "They have given it a new name, but it’s the same old game, and despite the rosy promises, only a few people here will walk away winners. The vast majority will lose everything."

Members of the committee falsely claimed that the payoffs were tax free because the IRS code permits gifts of up to $10,000 a year without tax liability. They also falsely implied the Attorney General’s Office ruled the program was legal.

Gregoire said her office is beginning to hear stories of pyramids collapsing around the state. There are stories of fist-fights and people who could ill-afford losing money realizing they have lost everything. "Pyramids are especially insidious because in the end, people are likely to victimize their friends and loved ones," she said. "They divide families and they splinter our communities."