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New York Flattens Pyramid Scheme

March 16, 2004

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New York Attorney General Eliot Spitzer has obtained a court order against a key promoter of Seasons of Sharing, a pyramid scheme that swept through southern New York in 2002.

The consent order and judgment requires Helene "Lennie" DiOrio of Vestal, NY, to pay $22,500 in restitution to the state. In addition, it orders her to pay $1,500 in civil penalties.

Spitzer said that victims of the scheme were told that a $5,000 investment would make them a member of the "gifting circle" board. The Seasons of Sharing gifting circle resembled an "upside down triangle" with four levels for participants to progress in order to receive their "gift" for their investment.

The introductory level, referred to as "Winter", had eight positions, each requiring the payment of $5,000. As more participants joined the board, individuals moved down to one of the four levels of the "triangle" on the "Spring" level, followed by "Summer" and finally "Fall Harvest." It is at this final level that an investor would collect $40,000 from the incoming participants.

As a result of DiOrio's participation in Seasons of Sharing, she reached the top level and obtained at least $22,500 from other participants.

In the summer of 2002, Spitzer's office issued a public warning that the "Seasons of Sharing" gifting circle was in fact an illegal pyramid scheme. When potential participants and board members asked about this, DiOrio adamantly disagreed and promised that pressure from legal authorities would die down and they could continue the program.

A lawsuit was filed by Spitzer's office in December 2003 which alleged that DiOrio actively pursued and recruited individuals to participate in the Seasons of Sharing pyramid scheme.

Besides the other penalties, the court order bars DiOrio from participating in or promoting illegal pyramid schemes in the future.

"This case sends the strong message that individuals who promote and participate in illegal pyramid schemes face sanctions and fines," Spitzer said. "State law prohibits pyramid schemes because they are bound to collapse under their own weight resulting in the enrichment of a few individuals who got in early at the expense of those who got in later."

State law prohibits "pyramid schemes" under which a non-refundable investment is made and the ability of the investor to receive a monetary return is conditioned on his/her recruiting additional people to invest. This can be distinguished from a true gift in which a person gives another person something of value with no expectation of profit or something in return.

Spitzer's office initially sought to dismantle the pyramid scheme by mediating refunds by those who participated without understanding that their actions were in violation of the law. Through mediation, Spitzer's office successfully oversaw the repayment of more than $300,000 to participants.

Spitzer's office was forced to sue DiOrio because she repeatedly refused to make repayment even after numerous requests by participants and by Spitzer's office.

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