For thousands of women struggling to keep households going as the credit crunch bit ever deeper, Give & Take seemed a heaven-sent deal: invest £3,000, receive £23,000 within days.
Pictures were circulated showing beaming members of the “gambling scheme” sprawled on carpets of red £50 notes. At champagne-fuelled ladies’ nights in a Somerset hotel, would-be participants were repeatedly told: “You can’t lose.”
Even better, the financial alchemy that could produce an 800 per cent profit in a fortnight was only for a select few. Word of its existence was strictly to be spread between friends, extended families and workplace colleagues.
Some 10,000 women and hundreds of men across south west England and Wales rushed to sign up.
But the scheme, which ran between May 2008 and April 2009, was a glitzy scam, designed by a “greedy” coterie of female fraudsters who led victims into a £21m financial black hole in the full knowledge it would wreck relationships and leave all but a tiny handful mired in debt.
The nine women, aged between 34 and 69, lined their own pockets to the tune of hundreds of thousands of pounds by either masterminding or promoting the con. The final three of the group this week pleaded guilty to criminal charges, bringing to an end a series of trials which can now be reported after the lifting of legal restrictions.
The convictions, which are the first under new legislation to protect consumers, brought a warning yesterday that Give & Take or G&T, also known as Key to a Fortune, was the latest manifestation of the persistent problem of pyramid schemes.
According to regulators, some 480,000 Britons – many of them women – each year fall victim to the scams, which work by offering investors improbable returns paid solely from an unsustainable influx of funds from others. Pyramid schemes cost British consumers about £420m a year but just one per cent of victims, who lose on average £930 each, report the fraud to the authorities.
Alex Chisholm, chairman of the Competition and Markets Authority, which brought the case along with trading standards officers in Bristol, said: “This case will be a warning. The vast majority of consumers stand to lose their money from such schemes. The adage remains: if it sounds too good to be true, it probably is.”
What set G&T apart was the scale to which it grew and the brazen, boiler room tactics adopted by its organisers to entice women to part with money which very few could afford to lose. In one case, a woman who was sent a picture of a work colleague receiving her £23,000, lost £15,000 by signing up to the scheme five times. Another paid for herself and two friends and persuaded her partner to pay £3,000. None of them received a penny in return.
At the heart of the scheme lay a triumvirate of businesswomen and housewives – schoolfriends Laura Fox, 69, the self-styled “committee chairman” of the scheme, and 68-year-old former hotelier Carol Chalmers. They were joined by 69-year-old treasurer Jennifer Smith-Hayes.
Their proposition was eye-catchingly simple, especially amid the financial turmoil of 2008 and 2009: in return for £3,000 and a pledge of the same amount from two others, a pay-out of £24,000 would be received within a matter of weeks.
They organised prize-giving parties at the Battleborough Grange Hotel in Burnham-on-Sea, owned at the time by Ms Chalmers, where up to 300 women at a time were plied with champagne as they witnessed the financial crowning of “Brides” – those at the top of each pyramid cell.
In order to maintain the fiction that the participant was “gambling”, each was asked a simple question (“What is the name of the big tower in Paris?” or “What type of animal is a Great Dane?”) with the option to ask a friend.
Once the correct answer had been provided, the winner was provided with £24,000 (minus a fixed £1,000 fee from which £600 was to be donated to charity and £400 used to cover “administration costs”) brought into the cheering room on a silver platter. At some evenings as much as £240,000 was dispensed in front of victims.
Mobile phone footage recorded at one party showed Fox shouting: “We are gambling in our own homes and that’s what makes it legal!”
Multiple victims said it was the witnessing of friends and family cashing out from the con that had persuaded them to take part.
But behind the exultant, cult-like atmosphere of the parties lay a hard-nosed commercial enterprise run by a small group of fraudsters led by Fox, Chalmers and Smith-Hayes, who were all sentenced to nine months’ imprisonment in 2012 for operating and promoting the scheme. A further three women – Mary Nash, 65, Susan Crane, 68, and 54-year-old Hazel Cameron – this week pleaded guilty to the same charge and will be sentenced next month.
As prosecutor Miles Bennett told Bristol Crown Court: “This wasn’t a bunch of ladies sitting around playing bridge. This was a committee and Laura Fox ruled these nights with a rod of iron.”
The scheme worked by dividing recruits into a 15-strong syndicate with each “nominee” required to pay £3,000 and provide a further £6,000 from two friends, relatives or colleagues. The members of the syndicate were noted in a four-tier triangular chart. Once the chart had been filled, the £3,000 paid by the eight people at the bottom went to the person at the top – the Bride. And so the process, which the organisers misleadingly told their victims had been approved by a barrister, was supposed to go on. Despite its creators’ efforts to whip up enthusiasm and harness peer networks, it inevitably ran out of contributors and collapsed.
Investigators believe that by that time some 900 syndicates had been formed, resulting in a total loss to the public of £21m. While the organisers profited to the tune of up to £92,000 each by ensuring they were Brides in multiple syndicates, 88 per cent of other investors lost money.
Judge Mark Horton, who has presided over the case, said: “Schemes like this lead to the destruction of lifelong friendships and families and in some cases whole communities.”
Driving instructor Dave Gough, from Caldicot, South Wales, paid £3,000 to join in 2009. He said: “We had a little dream that we could sort out our debts. It makes you angry.”
Comment: Beware, and then report, any plan offering easy riches
Personal finance editor
Pyramid schemes are illegal simply because the only people who ever win from them are those who set them up. That doesn’t stop them popping up regularly all over the country as fresh groups and communities are targeted with promises of easy money.
New recruits are often told to keep it a secret and only tell others they recruit, which adds to the notion that they’re all part of a secret winners’ club.
But simple maths shows that every pyramid scheme is destined to fall down very quickly. With the Give and Take scheme, each member had to recruit just two others. But the total number increases exponentially – so that by the 20th level of the pyramid, a million people would have to be recruited. By the 26th level, 67 million would have been needed, which is greater than the UK’s population.
They’re easy to spot. Any business that relies on recruiting others rather than selling a service or product is a pyramid scheme. So if a business charges you a fee to join and tells you to persuade others to join and pay a fee in turn, you’ll know it’s a pyramid.
If you come across one report it to Action Fraud on www.actionfraud.police.uk or call 0300 123 2040.