Wisconsin targets LV firm

Friday, Sept. 12, 2003 | 11:16 a.m.

The Wisconsin Department of Justice has filed a complaint against a Las Vegas company to retain more than $900,000 seized as part of an alleged pyramid scheme.

Global Daily Pay Inc. used a website operated from Wisconsin to recruit participants in the scheme, according to an affidavit filed last month by the state Department of Justice in Wisconsin's Circuit Court for Dane County.

The gaming enforcement division of the Wisconsin attorney general's office is pursuing the case because pyramid schemes are considered illegal lotteries under that state's gambling laws.

Pyramid schemes -- which pay early investors in the faux companies with money received from new participants -- also are illegal in Nevada.

The Wisconsin attorney general is still investigating the case and hasn't yet determined whether the scenario was in fact a pyramid scheme, the state's Assistant Attorney General Juan Colas said Thursday. The state also hasn't decided whether it will pursue criminal charges against anyone, Colas said. Operating an illegal lottery is a felony in Wisconsin.

The Nevada attorney general's office and the state Gaming Control Board said they were not aware of the investigation and were not involved in the complaint. Global Daily Pay and its president, Richard Krawczyk, do not hold any Nevada gaming licenses.

Krawczyk, who is based in Irvine, Calif., and Work Digital Inc., a Wisconsin-based company that operated Global Daily Pay's website and business, also were named in the complaint.

Representatives for the companies could not be reached for comment.

Participants paid entry fees of $150 to $10,000 to join the scheme and earned money by recruiting other persons to pay entry fees, the Wisconsin affidavit said. In order to generate income, the new recruits attracted others to pay entry fees.

"A person's earnings depend on when they enter the scheme, the number of additional participants they can entice and the number of participants his or her recruits can entice and when the market becomes saturated," the affidavit said.

The affidavit was filed alongside the asset forfeiture complaint, which must be filed within 30 days of an account seizure in order for the money to be handed over to the state, Colas said.

Global Daily Pay required that a portion of a participant's earnings be held in an "upgrade savings account" that was controlled by Work Digital, the affidavit said. The funds were used to pay Global Daily Pay for allowing individuals to enter the scheme, it said.

In July, the state seized about $1.1 million in a Milwaukee bank account owned by Work Digital and also shut down Global Daily Pay's website.

Work Digital operated the website from computer servers in Wisconsin and also ran the business under contract with Global Daily Pay, a Work Digital executive said in the affidavit.

Of the seized amount, $148,217.05 of the funds were fees received by Work Digital for its services, the affidavit said.

The complaint calls for the forfeiture of the remaining $943,668.29.