New pyramid scheme targets Nevada

Cathy Scott

Tuesday, Sept. 3, 1996 | 11:59 a.m.

While the attorney general's office continues investigating the Co-Opportunities pyramid scheme in Las Vegas, an international scam is hitting Northern Nevada, officials said.

Margaret Stanish, senior deputy attorney general, described it as "a very slick mailing" campaign that originated in Vancouver, British Columbia.

It invites people to pay $50 to a location in Australia and directs them to recruit people to participate.

"What we're seeing is an international pyramid infecting Nevada," said Stanish, who said she learned of the new pyramid scheme last week.

Because it's an international scheme, she said she is referring it to federal authorities for investigation.

To date, five people involved in the Co-Opportunities pyramid venture have been charged with felony securities fraud, sale of unregistered securities and theft. Twenty-seven people are being sued by the state for alleged trade practice violations.

People were asked to join what was known as a gift club by paying $2,000. In return, they were told they would receive $16,000 in a few days. More charges and suits are expected to be filed within the next few weeks, Stanish said.

The latest scheme, she said, "is something I think is scary. It's very slick."

It's scary, she said, because people buy into it.

"The way pyramids generally work is you have to buy the right to participate and that participation includes recruiting additional people," she said. "And you work your way to the top to get the payout. Not all people will collect because you run out of people. Someone always loses."

Another pyramid scheme that has been circulating around the state for a while is similar to a chain letter, Stanish said.

"There's more than one variation on this one," she said. "You get some peppy letter from somebody who was down on their luck and discovered this money-making venture whereby you get one person to pay you X amount of dollars, then you mail this letter to X number of people asking for money."

Stanish discovered the scheme when the chain letter was sent to her.