‘Birthday gifting ’ pitch pyramid scheme, police say
You’re invited to a birthday party by a family member, friend, co-worker or acquaintance and asked to give a cash gift of $5,000. The organizers promise you then will move up the ranks of the “birthday gifting cloud,” and when it’s your turn at the top, you’ll get $40,000 from a group of new recruits.
In Canada, you are assured, tax law allows for cash gifts.
Despite the trappings of legitimacy, it’s an old-fashioned pyramid scheme and it’s illegal.
On Monday, London police busted one such birthday party in Lambeth, laying charges of conducting or managing a pyramid scheme against two London residents.
These kinds of get-rich-quick scams have been around for decades, crime experts say, and while consumers have grown more savvy, so have scammers.
“The story sounds believable, right? Because they’re using this idea of a gift,” said Derek Silva, a professor of criminology at King ’s University College. “Part of it is that emotional pull. It sounds nice. And it sounds like it could work.”
Except participants rarely get to the top of the pecking order.
“Only the people at the top of the pyramid profit from this scheme and organizers will often inject themselves back into the pyramid at upper levels to profit more, leaving those waiting for their ‘birthday’ to wait even longer,” London police said.
At the heart, Silva says, is often a charismatic man or woman selling the idea of fast money.
“At the end of the day, they’re selling something,” he said. Branding it as a “birthday gifting cloud” gives it an air of legitimacy.
The “cloud” part, Silva said, also is designed to put potential victims at ease. Big companies such as Apple and banks have clouds.
“I think that the strategies have probably changed a little bit,” from early pyramid schemes, Silva said, because consumers are “a little bit more skeptical today than we have ever been. I do think that, in general, we are more educated about these things.” However, so are the criminals. In this case, the 16 members of the scheme were told to use nicknames, police say.
When it comes to grifting, there’s nothing new under the sun, said Const. Travis Buckle, a spokesperson for London police.
“With any type of scheme, there’s only so many ways they can get money from people. If it’s a type of scheme where there’s money to be made, people are going to continue doing it,” he said.
He urged other people who have taken part in the scheme to come forward. “I think the key thing to remember here is people need to be vigilant with their finances.”
As a result of this investigation, Bernard Baratta, 72, and Shakila Bayat, 51, are charged. They will appear in court on Jan. 7.