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The
Women's Dinner Party also goes by the names Women Empowering
Women, Girls' Gifting Club, For Women Only and Women's Dinner
Club.
If
you have joined the Women's Dinner Party or any pyramid
or gifting scheme, the attorney general's office says the
best way to avoid penalties is to give the money back to
the person who gave it to you.
Rebekah Folsom was invited to a Dinner Party but quickly
decided that she wasn't going to shell out $5,000. "All
these women are getting sucked in by greed and the nebulous
promise of a better life," she says.
Three
years ago a gifting club netted fines for more than 100
people throughout Oregon.
The
fines for participating in a pyramid can go as high as $25,000,
but such steep penalties are rarely invoked.
Last
summer, a Sherman County Justice of the Peace, Kate Martin,
was implicated as
participating in the Northwest Family Reunion gifting group.
She has since agreed to pay a $4,000 fine and return all
the money she received.
To report
a pyramid scheme, contact the state consumer information
hotline at 229-5576 (in the Portland area) or toll-free
(877) 877-9392 from out of town.
In 1997
in Albania, a pyramid scam that ran out of new recruits
caused riots in the streets when the payoffs tapered. Estimates
are that more than 90 percent of Albanians were involved.
As of
this writing, the Portland Police are not investigating
the Dinner Party.
Martha
Stewart, who knows from dinner parties, says the
traditional etiquette of entertaining has evolved to include
a few new rules: Anything goes, as long as you keep it simple
and comfortable for your guests.
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The Alameda living room is packed. Women fill the couch, balancing
plates of cheese and crackers on their knees--they crowd the
piano bench, curl on the floor and spill through the dining
room entryway holding glasses of red wine. They are young
hipsters, lesbian couples, elegant WASPS and aging flower
children. The gathering is semi-secret, only for the invited,
and everyone uses first names only. Men are not allowed. This
is a woman thing.
"Men would only want to make rules," a middle-aged woman
named Pamela says mockingly, as her girlfriend laughs at
the truth of that.
"This is my chance to connect to other women," says one
fresh-faced woman with long mouse-brown hair. "There are
good things I want to do." Besides, she says, her savings
were sitting stagnant in the bank, earning low interest,
while she sees fortunes being made in financial markets.
"What was I supposed to do, call Dean Witter and ask them
what I should do with my money? I don't think so."
The other women nod. Some talk about how they have paid
off their school loans or those of their children or finally
helped their aging mothers. One mentions setting up a fund
to help Hispanic women fly home to Mexico to escape abusive
husbands. They all agree: Sisterhood will raise them up
from the bonds of their second-class-citizen status. These
women know money means freedom and power, and they aim to
get some.
Welcome to the Women's Dinner Party, the latest pyramid
scheme to hit Portland. For the past four months, metro-area
women have been going to clandestine meetings to learn how
they can help other women--and themselves--change their
lives by getting rich quick. Part safe house, part slumber
party, part revival meeting, the gatherings have been held
as often as four nights a week. While it's impossible to
know how many people belong, members say that more than
200 women have each paid $5,000 in cash in hopes of reaping
a $40,000 jackpot five to seven weeks later. If true, there
is at least $800,000 to $1 million of unreported, unearned
cash in the safety deposit boxes, dresser drawers and bedroom
closets of women around Multnomah County.
The steep initial investment and high payoff appeals to
a mostly middle-class crowd, the kind of women who have
access to five grand (although half-spots for $2,500 are
available) and are willing to hand it over to a stranger.
The Dinner Party might look like a clever gifting system
that skirts the IRS, but in reality it's nothing more than
a basic pyramid scam, similar to a chain letter. Pyramid
scams have been around as long as there have been people
who want to believe they can get something for nothing.
They've been described as being like wildfires, flaring
bright until they're stomped out, only to spark again in
another location.
As much as its members want to think otherwise, the Dinner
Party isn't about women helping women; it's about women
cheating women. It's an illegal scam that's bound to collapse
on the very people it claims to be empowering. In other
words, sisters are doing it to themselves.
When they first hear about the Dinner Party, skeptics wonder
how anyone could be so stupid as to join. But the most successful
pyramids have a hook that appeals not just to greed but
to something higher, to social or political affinities or
emotional connections, allowing people to suspend logic
in pursuit of the payoff. Sometimes it's religion, sometimes
it's race, sometimes it's political affiliation.
For this group, it's a pair of X chromosomes.
Rebekah Folsom, until recently a technical writer at Marketing
One in Portland, was invited by a friend to a Dinner Party
meeting last month at Northeast 22nd Avenue and Knott Street.
Folsom's friend boasted that she had joined a women's group
that was going to help her get out of debt.
"At first, I thought of it as a board of women with money,"
she says, "that she'd met some nonprofit group."
Folsom was keen to find out more. She is carrying school
loans and $23,000 in medical debt. She was intrigued by
the idea of women taking care of their own. Moreover, she
trusted her friend, whom she knew through volunteering at
a women's social-service agency.
"God, I was thrilled. I wanted very much to believe some
generous feminists had an organization that could help me
out."
She found something else entirely.
Victoria is beaming like Tipper Gore at a meeting of Iowa
grange wives. Big-boned and blond, she wears a corporate-casual
outfit of khakis and a blazer. Paula Sanderson is hosting
the meeting at her Irvington home tonight, and Victoria
is the "presenter." You're here, Victoria says, because
you have been invited to take part in an exciting women-based
financial opportunity. The system has been working in Seattle
since last spring, she says, and in Canada for 10 years.
Holding a small white board, she draws 15 Xs to form the
shape of a triangle, with a single X at the top.
Each of the Xs is worth $5,000, and the payoff is $40,000--a
700 percent return. Because it is, after all, a "dinner
party," she explains the process in terms of food--calling
new members "appetizers" and saying women progress up the
ladder until they reach the "dessert" level and the payoff.
"That's when she gets her 'just desserts!'" Victoria gushes.
When a woman signs up to join the club, Victoria says,
within 24 hours she will get a phone call telling her who
the "birthday girl" is. That's the woman to whom the new
"appetizer" will be giving her $5,000 "gift." Seven other
appetizers join in to make a combined $40,000 "gift."
The birthday girl sets up the meeting, but Victoria urges
the appetizers to be creative in giving their gift (which
is given in cash, preferably small bills). Some have delivered
the money in a box of chocolates or a bouquet of roses,
or stuffed in red peppers with clever notes.
Just think what $40,000 would mean, Victoria says. Women
rarely have access to big chunks of money like this. It's
enough to pay off credit-card debt or school loans or put
a down payment on a house. No need to grovel before Regis
Philbin. Women can take care of their own.
The group operates on trust and integrity, Victoria explains.
There are no printed materials and no leaders. Volunteers
give the presentations and track the progress of the members
on computer.
Several women attest that while they were at first nervous
about taking so much money out of the bank in cash, they
soon found the experience of holding and controlling their
own money empowering. And giving it away, they all agreed,
was as good as the idea of getting gifted themselves.
This isn't a pyramid, Victoria says, as if oblivious to
the triangle of Xs she has drawn on the board. It's a circle.
A circle of women.
She explains that when the dessert girl collects all her
gifts, she can leave the circle with her $40,000 worth of
presents and "have a nice life," or she can join back up
again as an appetizer.
Someone asks the essential question: When every woman in
the area has signed up, how will they add new members and
pay off the desserts?
Another woman jumps in to reassure her. There are innumerable
women in the metro area, and it's growing constantly. Besides,
she says, there are more women than men.
At a Dinner Party, emotion roars like a she-lion while
logic whimpers forgotten and ignored in the corner.
For a single woman to receive $40,000, eight women have
to come in at the appetizer level. That seems plausible.
But consider that the Dinner Party claims at least 200 members.
If each of them is to get the $40,000 "dessert," 1,600 women
have to be recruited. For those 1,600 to be paid, 12,800
will have to join. And so on. Three cycles from now, the
Dinner Party will need to recruit 819,200 women. Considering
there are only about 245,000 adult women in Multnomah County
and 1.3 million in the entire state, it's easy to see that
sustaining the group is impossible.
But Victoria and the other presenters don't want anyone
to do the numbers.
"They make it sound as if the math is a little out of reach
by being very obfuscating," says Folsom, describing a meeting.
"That thing they do with the white board doesn't explain
anything."
Sanderson says that because women have the opportunity
to join again, the circle can maintain itself, as if the
same money could infinitely cycle through the group. Also,
she says, there's no reason the group can't keep growing.
It's been growing in Seattle, she says, and she believes
the organizers' claim that it came down from Canada 10 years
ago.
"Wouldn't it be wonderful if it would compound itself all
over the world?" It's as if Sanderson and the other members
believe they can defy gravity by not looking down.
Some of the club members, however, have been unable to
silence their consciences completely; they say they planned
to go through the cycle only once, as if that would keep
their hands clean. Others sense the small window of opportunity
and grudgingly admit it's better to have come early to dinner
when the feast is still hot than show up late when there
is nothing left on the table.
Yet they attack nonbelievers as being too linear and too
male. At the meetings, members testify that outsiders are
opposed to any gains made by women, including the accumulation
of wealth. Folsom says when she presented evidence to her
girlfriends that they were involved in a scam, she was accused
of buying into the system that wants to squelch any advances
made by women and minorities.
"The thing that made me so mad about that was I wasn't
talking about the white male power structure, I was talking
about math," she says wryly. "Math knows no gender or color."
After the pitch, Victoria puts aside the white board and
opens up the floor for questions. The group is sprinkled
with veterans who say they come each week for the chance
to bond with the other women. As if rehearsed, one of them
prods Victoria to talk about how people come up with the
initial $5,000.
"Well," says Victoria, "some women have used those blank
checks that come with their credit cards." Other women say
they've taken out signature loans, cashed out 401(k) plans
or borrowed from a boyfriend.
Victoria waves her hand with glee and says that men can't
join but they can "donate."
Pamela says she put the $5,000 on her credit card. When
she talks about being part of the group, tears of happiness
and excitement well up in her eyes at the thought of paying
off her debt.
Finally, another woman asks the most important question
of all: Is this legal?
"Good question!" Victoria says approvingly. Members of
the Dinner Party include CPAs and lawyers, she says, and
it isn't an illegal pyramid for three reasons: There isn't
anyone on top raking in the money, there is no central organization
controlling the money, and the members don't have to recruit
(although they are encouraged to do so and it is clearly
in their interest).
She adds that the IRS does not require taxes on gifts of
up to $10,000 from one person. "But you can report it if
you want to," she smiles. "There's a place for that on your
tax return. We tell women to follow their hearts and do
what they think is best."
Victoria adds that while some people want to paint the
Dinner Party as an illegal activity, the attorney general's
office in Washington state has taken a hands-off approach.
Although it may seem that foolishness is punishment enough
and that those at the bottom of the pyramid should be left
to their own devices, a participant can find herself in
both civil and criminal trouble. Gifting clubs such as this
are illegal in Oregon and all other states. Despite the
reassuring definition put forth at the meeting, a pyramid
scheme is simply any system where no products are sold and
new money is made only by the addition of new recruits.
Pyramids are illegal because they must inevitably fail and
the few will make money at the expense of the many.
Jan Margosian, consumer information coordinator for the
attorney general's office, says her office is investigating
Dinner Parties in Portland and in Lane and Linn counties.
"We are looking at Portland," she says. "We have names."
In Eugene, a similar group moved through the real-estate
industry, beauty salons and other places women tend to frequent
or work, according to Det. Steve Williams of the financial
crimes unit of the Eugene Police Department. The group hit
Lane County in July of last year and started coming loose
in September when recruiting became difficult. By that time
it had spread so fast and far that the wives of high-ranking
officials in the Eugene police department were being invited
to the meetings.
When the group started falling apart, Williams says, his
office started getting calls from people who were afraid
of being ripped off. The club had hit saturation point,
and organizers were desperate.
"They were changing money in the parking lot, like a drug
deal," he says. "We had one local business where so many
people were playing it was becoming intimidating to the
women who were not."
Just last week, the chief of police in Pendleton notified
the state attorney general's office, suspecting the Party
has come to his town.
Margosian considers the Women's Dinner Parties particularly
insidious because of their sophisticated sales pitch, which
ultimately turns women against women.
"How empowering is that?" Margosian asks. "How much of
a friend are you being if you're ripping off other women?"
Paula Sanderson maintains that the Dinner Party meetings
she's been holding at her house on Monday evenings are not
illegal.
"We come, we eat, we talk," she says.
Trying to reason with her is as frustrating as giving a
cat a bath.
WW: "The Dinner Club fits the criteria of a pyramid
scam, and pyramids are illegal."
Sanderson: "Multi-level marketing is legal."
WW: "Yes, but in multi-level marketing, there is
a product."
Sanderson: "What about the stock market? Are you trying
to tell me the stock market isn't a pyramid?"
WW: "In the stock market, you're buying equity in
a company or trading actual commodities."
Sanderson: "We have a commodity."
In a sense, she's right. It's the same commodity that made
Waiting to Exhale and Beaches top-grossing
movies. But it's more than cheap sentimentality. It's the
connection that women share--the Sisterhood. The Sisterhood
that says--when the boys are getting the good jobs, your
man has disappeared, your work is undervalued and you're
underpaid--your girlfriends will always be there. The Sisterhood
that says the system isn't working for us, and we need to
create our own rules.
"I trust women," Sanderson says. "If it were men, I wouldn't
trust it. If I have to explain that to you, you have totally
missed the point. Come to another meeting."
--Rachel Graham contributed to this story.
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Willamette Week | originally
published January 26,
2000
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