More than 30 persons gathered at a Springfield home Tuesday night, each bearing $1,000 cash and, according to Fairfax County police, each hoping to turn it into $16,000.
The gathering, apparently one of several "easy money" efforts formed in suburban Washington in the past several months, ended when an undercover investigator arrested the host and charged him with promoting pyrmid schemes.
Pyramid schemes are illegal. In Virginia, the state law that makes it unlawful to "contrive . . . to set up, operate, advertise, or promote any pyramid promotional scheme" carries up to a year in jail or a $1,000 fine or both.
But meetings such as the one Tuesday night are on the increase in the suburbs, according to investigators who attribute their popularity to "greed."
Typically, according to one former participant in Washington area pyramid sessions, a meeting begins with the person at the top of the pyramid (a chart that governs the flow of money at the meeting) reading the U.S. Constitution's Fourth Amendment protecting citizens from unreasonable search and seizure. Then the person demands that all law enforcement officiers and Internal Revenue Service agents leave the premises immediately.
"Once the meeting starts, the telephone is taken off the hook, the doors are locked and absolutely no one is permitted to leave before the meeting is over -- and the meeting lasts from two to four hours," said the source.
The pyramid scheme works like this: Those who attend the gatherings draw lots to establish their position on the pyramid-shaped chart. Then money, always in cash, is exchanged in the form of "gifts." Half of each participant's money -- typically $500 -- goes to the person whose name is immediately above the giver on the pyramid and the other $500 to the person at the top of the pyramid.
"Those at the top of the pyramid make substantial amounts of money." says Fairfax County police spokesman Warren Carmichael, "while those at the bottom make very little, if anything at all."
Tom Gallahue, a Fairfax prosecutor, adds: "Nobody seems to realize that at some point the money runs out."
The pyramid meetings can occur as often as four times a week, according to participants, with members of a pyramid being urged to recruit new members to keep the scheme going.
The atmosphere at the meetings is described as "highly promotional" and marked by legalistic cautions not limited to the reading of the Fourth Amendment. "They told us that the meetings . . . have to be held in single-family, detached homes, and that the homes must be owned, and not rented, for legal reasons said one participant.
The tip that led to Tuesday night's police action came in a phone call to Lt. Col. Carroll D. Buracker, deputy Fairfax County police chief.
"The citizen said that soliciting for this pyramid was going on at Springfield Mall, and that there would be a meeting that night. After calling the commonwealth's attorney's office, I told the criminal investigation division to work on it," Buracker said.
An undercover investigator then appeared at the home at 7505 Essex Ave., Springfield, with $1,000 in cash and made an arrest after money began to change hands, police said.
Charged with violating the Virginia pyramid law was Alan C. Johnson, 26, a self-employed mechanic.
Carmichael said an investigation is continuing. Gallahue added that anyone "who asked a friend to come to donate money" would be breaking the law "in furtherance of the scheme."
"There are still outstanding warrants for people who were at the meeting," Gallahue said.
Another Virginia law makes it possible for authorities to place earnings resulting from a pyramid scheme in receivership, with the monies then being redistributed to those who have been bilked of their money, according to a lawyer.
The resurgence of pyramid schemes in the area is described as a recent phenomenon, and Tuesday night's arrest was the first this year in Fairfax County, according to Carmichael. Pyrmid meetings reportedly have occurred at a popular motel off the Capital Beltway, and a Springfield movie theater as tell as at several homes.