
                         THE VIRGINIAN-PILOT
                 Copyright (c) 1994, Landmark Communications, Inc.

DATE: THURSDAY, June 9, 1994                    TAG: 9406080140 
SECTION: SUFFOLK SUN                     PAGE: 06    EDITION: FINAL  
SOURCE: John Pruitt 
DATELINE: 940609                                 LENGTH: Medium

WHEN MONEY TALKS, LITTLE ELSE IS HEARD

{LEAD} Suppose a neighbor invites you to a little gathering, then proceeds to tell you how an investment of $1,500 could yield $12,000 - a tempting one-for-eight payoff. The neighbor assures you that it's perfectly legal, that you won't even have to report your earnings to the Internal Revenue Service, that there's just no way you'll lose a dime.

It beats the lottery, the neighbor offers. Why waste your money on a one-in-a-million chance when he can offer a sure thing?

{REST} Why, this neighbor knows of people who have raked in $12,000 - not just once but two, three times, as their names reached the pinnacle of the pyramid. How can anyone afford to forgo that?

Are you convinced? This is, after all, the promise of a friend, and you just know your neighbor wouldn't risk friendship for a few quick bucks.

Or does reason overcome greed and cause you to hold on to your wallet? As tempting as the fast money sounds, does it also sound just too good to be true? In all this talk of winning, do you still realize that every game has both winners and losers?

For heaven only knows how many people in Suffolk , and in other areas, greed has won big time in a pyramid scheme called ``Friends Helping Friends.'' For too many, the only ``help'' involved has been in separating them from their money.

While some of the participants certainly didn't realize that their participation was illegal, others saw only dollar signs and fast-talked investors aboard as fast as they could. They just didn't care that while they became as much as $36,000 richer, 24 others - ostensibly friends - became at least $1,500 poorer.

Nor did some investors seem to realize that pyramid schemes are built on diminishing returns: Those who enter early may indeed reap big bucks, but latter investors are losers as the pool of suckers dries up and the pyramid collapses.

So what happens if, somewhere along the way, participants realize that they've been hoodwinked, that what they truly believed to be an honest investment made at the behest of a trusted friend is illegal?

Do they just write off their loss as the price of a very harsh lesson in the consequences of greed, rely on their friends to do the right thing and return their money or seek legal relief?

Suffolk participants reportedly have used all three options. Rather than be embarrassed for their foolishness, some have just cut their losses. Others have been relieved by winners who returned their payoff because they didn't want money at the expense of friends. And last week, three Suffolk women who filed suit in General District Court were awarded repayment of their $1,500 investments. An appeal is expected.

T. Kirk Pretlow, the attorney representing the women, said he didn't seek criminal prosecution of the woman who enticed them to invest, just to return things to the way they were before they invested in the scheme.

The women did not know their participation was illegal - a misdemeanor punishable by up to one year in jail and/or a fine up to $1,000 - and pulled out as soon as they learned that, he said.

Numerous state statutes protect Virginians from those operating schemes based on promises too good to be true. Among them is the Virginia Consumer Protection Act, gambling laws and statues against misrepresentation.

By Mr. Pretlow's count, it would ``absolutely shock you'' to know how many Suffolk people were taken in by ``Friends Helping Friends.'' If they lined up on Main Street, he said, ``it would be the biggest parade we've ever had, by all means.''

Don't expect it any time soon. Not that many people are anxious to march to the drum beat of greed or falling for a scheme too good to be true. by CNB