Money for Nothing

Women's "gifting circles" are the fastest-growing -- and cruelest -- scam around.

By Shea Dean from Reader's Digest | November 2003

To deflect potential victims from that grim mathematical reality, the perpetrators of these schemes cloak their scams in touchy-feely New Age language or appeals to sisterhood. Authorities say people who originate gifting circles are almost always career con artists. But if a circle sustains itself after an initial cycle or two, subsequent “winners” might genuinely not realize they are committing a crime.

Once a woman has joined a circle by putting up cash, there’s a powerful incentive to stay — even if things begin to look odd. Gifting circle victim Heather Wolfsmith, a 31-year-old financial advisor in New York City, quickly learned to keep her questions about the legality of the circle to herself. “The prevailing feeling was ‘Don’t ask,’ ” she says. “It was like you were afraid to live your dream, and that’s why you’re having these doubts.”

Kathy Guardipee, 55, of Browning, Mont., kept quiet about her concerns for a different reason — one that had a unique female appeal. “There are a lot of women going through abusive relationships, and this is their way out,” she remembers being warned. Gina DeJoy was told the same thing.

While they may be poorer, Guardipee, Wolfsmith, DeIaco and DeJoy decided not to keep quiet. All three asked for their money back, and were refused. So they took action.

Wolfsmith has had the most success. In September 2001, she and five others in her circle, including DeIaco, filed suit in small-claims court against the women they “gifted.” Victory was sweet. Ruling that the defendants — who were involved in multiple circles — showed “malicious intent,” the judge awarded triple damages. The decision was upheld last year.

Not everyone will be so fortunate. State laws governing scams vary, and some courts may rule that merely participating in — not just profiting from — a pyramid scheme is a criminal act. Helping a gifting-circle victim get her money back would then be like helping a person recoup losses from an illegal poker game. And defendants, even if found guilty, can claim bankruptcy to avoid their debt.

There are some bright notes, though. In New York, the attorney general recently “unwound” a gifting circle, returning more than $170,000 to the proper pockets. In Wisconsin, an amnesty program got $1.2 million back to its rightful owners. Maine authorities are trying to do the same for DeJoy and her fellow victims, and have managed to settle a number of cases in their favor. But DeJoy turned down a settlement offer for one-fifth of her original investment — $1,000 — in hopes of getting all her money back.

Whatever happens, she can already claim at least a modicum of revenge. Despite the embarrassment of getting taken, she’s been heartened by the response from other women in her area. “It was nice to have people come out and say, ‘Yeah, we almost did it. You weren’t a complete nitwit.’ ”

In fact, she might be wiser than the crooks who hatched the scheme. For all the talk about building a community, A Woman’s Project fell apart the minute the chance to make money evaporated. By contrast, DeJoy and two other Maine women duped by gifting circles have begun getting together each week for lunch, and may, indeed, become friends for life.

If you’ve been suckered, contact the National Fraud Information Center/Internet Fraud Watch ( or 800-876-7060).

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