Word: pyramides
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...Illegal pyramid clubs flourish
Thus began another session of what its adherents call the "business concept list," but what law-enforcement officials call the "pyramid club," an illegal and get-rich-quick variation, California-style, of the old chain-letter scam...
...each, 32 newcomers buy slots on the bottom row of a pyramid-shaped roster. Each new player pays half of his $1,000 to the person at the pinnacle, who ends up with $16,000. The new player also pays his remaining $500 to the person directly above him on the next tier, which contains 16 people. Since each person on that tier gets paid by two of the newcomers, he ends up with $1,000, thus recouping his original investment. As more people buy in, the players move up the chart. In time, theoretically, each person reaches...
...such an "endless" chain is illegal in California. Since the supply of investors is finite, someone is bound to get burned, sooner or later. By last week, police had arrested 256 pyramid builders, and the craze was showing signs of fading-onlyto rise again in a less expensive form. The player invests $100, the roster contains 16 names, and the payoff is a modest $800. Enough, perhaps, to pay your lawyer if the police join the game...
...money running through the public's fingers, the Federal Government is beginning to face a legal tender shortage. With the price of copper going up, people are hoarding pennies. A paucity of $50 and $100 bills has been reported in California, where they are widely used in "pyramid clubs" (the modern variation of the old chain letter), which usually require players to contribute $500 or $1,000 in cash. The Saudis also like $100 bills. In May, Saudi Arabian banks took delivery on $250 million in $100s...