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Gifting Circles and Gifting Clubs

Whenever our economy gets tougher, there is an upheaval in the amount of gifting clubs that spring up. And spring up, they do!

Recently there has been a very 'spiritual' slant to these types of circles. It is a mix of new-age philosophy and 'female-empowerment' or Goddess Gifting Circles. These gifting pyramid schemes usually begin as a woman's gifting circle. Then around comes a 'men's gifting group'. In the mid-eighties this scam was called the 'Airplane Game'. A friend of mine made lots of money on the Airplane Game. Even so, it was still illegal. Many of these clubs and circles spend lots and lots of time talking about how they are not illegal. It seems to me that anything that spends so much time justifying itself is either going to be difficult to market or have problems with the law. The third possibility is that it is a destructive cult.

So the gifting circle concept is BACK! Or maybe it never left. I recently had a good friend of mine tell me he had an "amazing opportunity" to tell me about and that he could not talk to me about it on the phone. My red flags immediately went up. Matt Gagnon has always joked around about 'secret clubs' and 'mystery money'. I want to tell you there is no such thing. If there is, it is illegal. Gifting circles are illegal. That is why they are secret. If you are going to be in one, do NOT justify it, just do it at your own risk. Yes, you can end up in jail if somebody gets really upset. Just be careful. I recommend not doing it.

Why are people attracted to these types of scams?

It's pretty simple. These people often have a low financial IQ. The attraction comes from a lack of belonging and a lack of money.  When you have a serious lack of both, a gifting circle concept will be very attractive.

Another reason is that people are seduced by the idea that it is for 'friends only'. It is a private club. "You should offer it only to your intimate friends" they say. The need to belong and feel supported is the deepest human need. Just be careful of systems that capitalize on this need. Find ways to make friends who have real business sense, or who will simply loan you money outright! The gifting circle adds a completely other meaning to using OPM or other people's money.

I have a female friend of mine whom I love dearly. She is adamant about the spiritual value of such a 'gifting circle'. Understand that I am not against wealth-building communities. I love to share wealth building goals and effective mentoring. I am a mentor. I have advisors and mentors. The only problem I have is the 'musical chairs' games played in the gifting community. One of the methods of a 'gifting circle' goes something like this:

'Share the throne' versus 'musical chairs'.

The 'theme' can be spiritual or non-spiritual, but there is always a person at the top of the pyramid. In the Airplane game it was 'the pilot' in the Goddess game it may be 'the Queen' , 'the guru' or the 'elder'. It doesn't really matter. The fact is that this person has a temporary seat of power. Basically she is 'gifted' all of the cash from people who have brought in other members in hopes of eventually finding themselves in that wealthy 'seat of power'. This can bring in lots and lots of cash. In the airplane game there was the 'pilot', the 'co-pilot' the 'stewards' and on and on ad nauseum. Many ideas are exchanged, or may be. It depends on the type of the scam or the intent of the director. There may be some sort of ideology that is exchanged- like 'finding the financial strength within' or 'money is an illusion' or whatever.  After giving a couple thousand dollars or more, you may move up to the next level. With commitment, dedication and lots of 'secret' recruiting, you will eventially be in the 'Captain's' seat and walk away with 10,000 or 20,000 bucks, right? Sounds like a great idea! Everyone is getting more intimate, sharing the same goals, learning from one another?

Wrong! What happens if the person in the 'seat of power' runs away with all the money and all the ideas. Morale bottoms out and the group breaks up. This is just like a destructive cult. You see, the problem is that most people, and I mean almost everyone who joins a gifting circle, never sees a dime.  They never receive any of the 'winnings' or the 'sharings' or the 'tithings' or whatever the heck you wanna call it. It just doesn't happen for most people. You are better off throwing your money in the donation pan at church!

We give gifting circles two thumbs way way down. Zero stars. Avoid this tactic and avoid this strategy. Be careful.

Here is an e-mail I got in my in-box today. Notice that the call is located in Las Vegas Nevada, which is a red flag as a rule of thumb. This should show you that 'gifting circles' are still active:



You have been invited by XXXX to join a conference call. Please review the conference details and information on how to accept or decline this invitation.
Conference Details

Subject: Coming full circle

Comments/Agenda: We will be joined by a new circle brother who has connected with the original women's circles that inspired this circle. This is an amazing connection which brings us back to the original vision and inspiration that gave birth to this circle, and it feels like we are ready to move into high gear!! I shortened the call to 40 minutes and we will be focusing on getting down to business and making this thing move!!

Date: Monday, March 01, 2004
Start Time: 07:30 PM Mountain Std Time
End Time: 08:10 PM Mountain Std Time
Dial-in Number: 1-702-XXX-XXXX (Las Vegas, Nevada)
Access Code: 27111

BSA gives gifting circles 4 and 1/2 skulls because you may stand to lose anywhere from one thousand dollars to ten thousand dollars. Proceed with real caution!!!


                                             Gifting Circles

                                               Matt Gagnon

I have written a lot of reviews over the last five years of running Mazu Publishing. Never in that time have I run across a bigger scam than gifting. What is gifting? That really depends on who you ask. The best way to understand gifting is to explain how it works.

It goes a little something like this:

People start a gifting club, in which people are going to make a lot of money recruiting other people to become members of the club that they just started.

While some of the clubs are cheap, most are not. Most have entries ranging from $2,000 to $10,000. The idea is that you pay your $2,000 (or whatever) and now you have the ability to recruit others for $2,000. Usually there are requirements like having to lose your first two members before you can recruit but that depends on how the gifting program you are in is set up.

Your $2,000 makes you a freshman but after the first two people you recruit you move up the list to the Sophomore. Your two get their two you move to Junior. Different clubs have different titles but I think you get the drift. Once you are at the top of the list (Senior) you get $16,000. Basically the eight freshmen coming in at the bottom. 8 X $2,000 = $16,000.

What do you get for your $2,000? Nothing more than membership in the club and the ability to recruit after you get your first two people to cough up $2,000.

If this sounds a lot like an illegal pyramid scheme, it is. But most people get around the fact that it is illegal because they tell people in the program that they have hired an attorney or they have found a loophole. These are “gifts” (hence the name) and there is only a $10,000 limit on gifts.

The real truth is: THEY ARE LYING.

Not a single one of these programs was or has ever been legal. Like most scams, they purely work on people’s greed. People are not giving this money as gifts. They are giving it because they are expecting that they are going to see a return on this. That is what makes it illegal.

One of the most enticing aspects is that it sucks so many people in. Think that you are immune? Think again. A few very good friends of mine got sucked into a gifting program by a friend that had just become a Senior in a program. His phone call stating that he just put in $2,000, made a few phone calls and got $16,000 (tax free) just a few weeks later was very powerful.

The problem is that all gifting programs (without exception) crash at some point. Maybe two weeks or two months after you have gotten in. Think that it won’t happen? It always does. If you are below a senior then you are probably not only out your $2,000 but you may have to pay back any friends that lost money as well. If you are a Senior then you are responsible for the entire board.

That can really create some problems when people that you hardly even know are calling you looking for their $2,000. Quite a few people that were stuck holding the bag when my friends program died had to take out loans to repay people. Some folks even moved and shut off their phone. It got real ugly fast.

My advice on gifting is very simple. Don’t Do It. Find something else to do with your time. Don’t let your greed cause problems if your life. Money should be created to enhance your life. Money should not ever cause problems with your existence.

P.S. If you are even thinking about joining a gifting program because this is different or that is different. Don’t. You are 100% wasting your time, flirting with the law (they are all illegal) and opening the flood gates to ruin some relationships with people that you know.

It happened with over 200 programs the FTC shut down last year from Seattle to Boston.

Matt Gagnon

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