Local BBB warns Columbus area of pyramid scam
The local Better Business Bureau is warning Columbus area residents of a pyramid scam that may be operating in the area.
Leonard Crain, president and chief executive officer of the BBB serving east Alabama and west and southwest Georgia, said the bureau has received one complaint about a group called Elite Activity, which typically targets religious congregations to recruit members into a gifting club.
A gifting club recruits new members with the lure that they will receive thousands of dollars if they just give a monetary “gift” to participate in the invitation-only club, according to the BBB. Participants pool their cash and have to find new contributors to grow the pot. Those who get in early typically can walk away with cash. But the BBB warned the pyramid usually collapses, causing latecomers to lose their investments.
Elite Activity, which is believed to have originated in Texas, has been known to start up, disappear, then reappear in different areas of the U.S. — sometimes under different club names. A number of BBB branches and attorney generals in other states have taken action against the group.
The group’s Web sites, www.eliteresurrected.org and www.eliteactivity.tv, state the sites are “no longer functional” effective Aug. 21, 2009. A statement appears on both sites acknowledging questions around the group’s legitimacy.
“Months ago, various agencies worldwide started questioning the integrity of the intentions of this organization and the belief system we so strongly hold dear,” the Web site read. “They are under the impression that our model of unconditional gifting is merely a disguise for fraudulent activities. These inquiries presented an opportunity for us to look into our hearts and into this organization to seek out the truth. While we assure you and the rest of the world that our intentions are pure, we must agree with our critics that it could appear, to skeptics, to be in violation of the law.”
The statement said the group planned to learn how they could “remove any questions” about their intentions, with the help of leaders, consultants and attorneys. It urged members to share their positive stories about the gifting program:
“The sun has dipped below the horizon and we wait the dawning of a new morn and the sunrise which follows. Please use this opportunity for self-reflection; did you give with pure intent, or deep down, did you give with an expectation of profit?”
Crain said though they’ve only received one complaint, he wanted to get the word out to the local community just in case people saw similar activity.
The BBB was contacted by a Cleveland, Ohio, man, who reported a Columbus man was trying to start the program in the local area. The man had been recruited by the Columbus resident and was then instructed to send $100 to someone in Rhode Island. The Ohio man never received a financial return and lost his investment, Crain said.
Crain declined to name the Columbus man. He said gifting club members typically are not prosecuted unless they’ve amassed a large number of members, and it appears the Columbus man did not.
Those who suspect a program may be a gifting club should contact the local BBB before they send any money, he said.
“If they’re being asked to contribute or pay a fee to participate, right away the red flags should go up,” Crain said. That should also be the case if they’re being asked to recruit members, he added.
This story was originally published March 10, 2010 at 12:00 AM with the headline "Local BBB warns Columbus area of pyramid scam."