Castle Grande was a real estate development in Arkansas about 10 miles south of Little Rock. It came into National news as a result of the Whitewater investigations. The project was a 1,050-acre (4.2 km) lot where Jim McDougal hoped to build a microbrewery , shopping center, a trailer park and other future projects in 1985. The land was scrub pine forest that had failed already as an industrial development. The sales price was $ 1.75 million. State regulations prohibited Jim McDougal from investing more than 6% of his Madison Guaranty S&L assets. So, he put in $ 600,000 of Madison money and then for the difference had Seth Ward put in the remaining $ 1.15 million. This money Ward borrowed from Madison Guaranty on non-recourse, no personal obligation to repay. If federal regulators found out, McDougal's S&L could be shut down, since it had already been operating under orders to correct its lending practices.
83-589: Seth Ward , an Arkansas businessman and Webster Hubbell 's father-in-law, was hired by Jim McDougal to assist in land acquisition for the Castle Grande project. Hillary Clinton , a partner with the Rose Law Firm , worked with Ward on certain legal details of the project known as Industrial Development Corporation (IDC). Webster Hubbell was also a partner at the Rose Law Firm. The bad loans for
166-570: A "passenger" and hopefully recruit enough to reach captain again, thereby earning a second payout. Similar to the eight ball model, the Blessing Loom tricks potential investors by claiming to turn $ 100 into $ 800. This scheme has a circular structure, as increases in new recruits pushes individuals closer to the center of the circle, hence the " Loom " in the name. Each participant needs to recruit two people without providing them with any service or product. The scam often resurfaces online across
249-556: A Ponzi scheme and associated pyramid scam netting US$ 20 million. (The Kyiv Post also reported that some estimates were as high as US$ 150 million.) In the United Kingdom in 2008 and 2009, a £21 million pyramid scheme named 'Give and Take' involved at least 10,000 victims in the south-west of England and South Wales. Leaders of the scheme were prosecuted and served time in jail before being ordered to pay £500,000 in compensation and costs in 2015. The cost of bringing
332-406: A certain number of new people join the end of the queue. For example, ten joiners may be required for the person at the front to receive their item and leave the queue. Each joiner is required to buy an expensive but potentially worthless item, such as an e-book, for their position in the queue. The scheme organizer profits because the income from joiners far exceeds the cost of sending out the item to
415-545: A direct-sales company was declared operating a pyramid scheme in Thailand. The Criminal Court handed down prison terms totaling 12,265 to 12,267 years to 22 people convicted over the scheme, which conned about 120,000 people out of more than 20 billion baht. The Airplane Game scheme resurfaced in 2020 as a savings club by the name of the Blessing Loom, Blessing Circle, Sending Flower, Gifting Flower, and so on. It
498-588: A number of violent incidents and calls were made by politicians to tighten existing legislation. Ireland has launched a website to better educate consumers to pyramid schemes and other scams. On 12 November 2008, riots broke out in the municipalities of Pasto , Tumaco , Popayán and Santander de Quilichao , Colombia , after the collapse of several pyramid schemes. Thousands of victims had invested their money in pyramids that promised them extraordinary interest rates. The lack of regulatory laws allowed those pyramids to grow excessively for several years. Finally, after
581-398: A package of goods and services such as internet mail, and that the company offered "significant commissions" to consumers who purchased and resold the package. The FTC alleged that the company's program was instead and in reality a pyramid scheme that did not disclose that most consumers' money would be kept, and that it gave affiliates material that allowed them to scam others. WinCapita
664-445: A portion as profit. Some multi-level marketing (MLM) companies operate as pyramid schemes and consumers often confuse legitimate multi-level marketing with pyramid schemes. According to the U.S. Federal Trade Commission (FTC) legitimate MLM businesses are distinguished from pyramid schemes by participants making money primarily from product sales, rather than recruitment: Not all multi-level marketing plans are legitimate. If
747-536: A portion of Ward's Castle Grande holdings for $ 1.2 million. Tucker and Randolph borrowed the additional $ 1.05 million from Madison. McDougal then loaned his old friend and political mentor, Senator William Fulbright , $ 700,000 to buy out the bulk of Ward's remaining holdings. The net effect was to remove Ward's non-recourse loan from the Madison books and generate substantial sales profits and commissions for Madison. The transactions were designed to be confusing to keep
830-481: A portion of Ward's Castle Grande holdings for $ 1.2 million. Tucker and Randolph borrowed the additional $ 1.05 million from Madison. McDougal then loaned his old friend and political mentor, Senator William Fulbright , $ 700,000 to buy out the bulk of Ward's remaining holdings. The net effect was to remove Ward's non-recourse loan from the Madison books and generate substantial sales profits and commissions for Madison. The transactions were designed to be confusing to keep
913-447: A pyramid scheme is characterized by a few people (including the creators of the scheme) making large amounts of money, while subsequent members lose money. For this reason, they are considered scams . Many pyramids are more sophisticated than the simple model. These recognize that recruiting a large number of others into a scheme can be difficult, so a seemingly simpler model is used. In this model each person must recruit two others, but
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#1732775662450996-414: A pyramid; here, the participants pay to join a waiting list for a desirable product, which only a fraction of them can ever receive. Since matrix schemes follow the same laws of geometric progression as pyramids, they are subsequently as doomed to collapse. Such schemes operate as a queue, where the person at head of the queue receives an item such as a television, games console, digital camcorder, etc. when
1079-559: A result of the Whitewater investigations. The project was a 1,050-acre (4.2 km ) lot where Jim McDougal hoped to build a microbrewery , shopping center, a trailer park and other future projects in 1985. The land was scrub pine forest that had failed already as an industrial development. The sales price was $ 1.75 million. State regulations prohibited Jim McDougal from investing more than 6% of his Madison Guaranty S&L assets. So, he put in $ 600,000 of Madison money and then for
1162-519: A separate deal completely?" Hillary Clinton's reply: Well, my understanding is that the work for Madison concerned property that was referred to then at the time and continually by the Rose Firm as IDC or Industrial Development Corporation property. I know that work as IDC. That's how it was billed. And I did not know that there was something called Castle Grande, to the best of my recollection, until it came to my attention through these investigations,
1245-462: A separate deal completely?" Hillary Clinton's reply: Well, my understanding is that the work for Madison concerned property that was referred to then at the time and continually by the Rose Firm as IDC or Industrial Development Corporation property. I know that work as IDC. That's how it was billed. And I did not know that there was something called Castle Grande, to the best of my recollection, until it came to my attention through these investigations,
1328-768: A series of grand jury questions about Hillary Clinton and Castle Grande that Mrs. McDougal refused to answer During the grand jury McDougal stated her full name "for the record," then refused to answer any additional questions. Her testimony included the response "Get another independent counsel and I'll answer every question.". U.S. District Court Judge Susan Webber Wright sentenced her to prison confinement for civil contempt of court related to McDougal's unwillingness to answer "three questions." [1] One of those questions concerned whether President Bill Clinton lied in his testimony during her Whitewater trial, particularly when he denied any knowledge of an illegal $ 300,000 loan. From September 9, 1996 until March 6, 1998, McDougal spent
1411-767: A series of grand jury questions about Hillary Clinton and Castle Grande that Mrs. McDougal refused to answer During the grand jury McDougal stated her full name "for the record," then refused to answer any additional questions. Her testimony included the response "Get another independent counsel and I'll answer every question.". U.S. District Court Judge Susan Webber Wright sentenced her to prison confinement for civil contempt of court related to McDougal's unwillingness to answer "three questions." [1] One of those questions concerned whether President Bill Clinton lied in his testimony during her Whitewater trial, particularly when he denied any knowledge of an illegal $ 300,000 loan. From September 9, 1996 until March 6, 1998, McDougal spent
1494-638: A suicide, but several conspiracy theories have since emerged . Sam Bratton was an aide to Gov. Bill Clinton. He oversaw state regulatory issues, he was notified by the Arkansas Securities Commissioner, Beverly Bassett Schaffer, that Madison S&L was in trouble with federal securities regulators. Pyramid scheme A pyramid scheme is a business model which, rather than earning money (or providing returns on investments ) by sale of legitimate products to an end consumer, mainly earns money by recruiting new members with
1577-520: A suicide, but several conspiracy theories have since emerged . Sam Bratton was an aide to Gov. Bill Clinton. He oversaw state regulatory issues, he was notified by the Arkansas Securities Commissioner, Beverly Bassett Schaffer, that Madison S&L was in trouble with federal securities regulators. Seth Ward (Whitewater) Castle Grande was a real estate development in Arkansas about 10 miles south of Little Rock. It came into National news as
1660-419: Is also misrepresented as a Sou-Sou , a legitimate savings club model where the number of people paying into the pot is fixed and each person gets a payout on regular basis. This is distinct from the pyramid scheme variation making use of the hierarchical flower model, where new members are continually recruited into the group by people at the edges of the flower. This re-imagining of the old Airplane/8-ball model
1743-576: Is legal. Multi-level marketing lobbying groups have pressured US government regulators to maintain the legal status of such schemes. Pyramid schemes are illegal in many countries or regions including Albania , Austria , Belgium , Bahrain , Bangladesh , Brazil , Canada , China , Colombia , Denmark , the Dominican Republic , Estonia , Finland , France , Germany , Hong Kong , Hungary , Iceland , India , Indonesia , Iran , Ireland , Italy , Japan , Malaysia ,
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#17327756624501826-402: Is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships. Emphasis on selling franchises rather than the product eventually leads to a point where the supply of potential investors is exhausted and the pyramid collapses. Matrix schemes use the same fraudulent, unsustainable system as
1909-626: Is reported, have recouped any of their investment. BurnLounge , Inc. was a multi-level marketing online music store founded in 2004 and based in New York City. By 2006 the company reported 30,000 members using the site to sell music through its network. In 2007, the Federal Trade Commission sued the company for being an illegal pyramid scheme. The company lost the suit in 2012, and lost appeal in June 2014. In June 2015,
1992-465: Is used, there are 15 total people in four tiers (1 + 2 + 4 + 8) in the scheme—with the Airplane Game as the example, the person at the top of this tree is the "captain", the two below are "co-pilots", the four below are "crew", and the bottom eight joiners are the "passengers". The eight passengers must each pay (or "gift") a sum (e.g., $ 5,000) to join the scheme. This sum (e.g., $ 40,000) goes to
2075-717: The Maldives , Mexico , Nepal , the Netherlands , New Zealand , Norway , Oman , Peru , the Philippines , Poland , Portugal , Romania , Russia , Serbia , South Africa , Singapore , Spain , Ethiopia , Sri Lanka , Sweden , Switzerland , Taiwan , Thailand , Trinidad and Tobago , Turkey , Ukraine , the United Kingdom , and the United States . The 1997 Albanian civil unrest
2158-516: The "Original Dinner Party" which labeled the tiers as "dessert", "main course", "side salad", and "appetizer". A person on the "dessert" course is the one at the top of the tree. Another variant, "Treasure Traders", variously used gemology terms such as "polishers", "stone cutters", etc. One version called the Abundance Fractal uses the four elements as the names of tiers: "Fire", "Air", "Earth", and "Water". A more recent variation known as
2241-508: The Castle Grande project. Hillary Clinton , a partner with the Rose Law Firm , worked with Ward on certain legal details of the project known as Industrial Development Corporation (IDC). Webster Hubbell was also a partner at the Rose Law Firm. The bad loans for the project cost the public $ 4 million. Robert W. Palmer was the land appraiser for one of the Castle Grande loans, he later admitted to conspiring with Jim McDougal and others with Madison Guaranty savings association. The conspiracy
2324-735: The FTC began returning $ 1.9 million to people who had lost money in the scheme. In August 2015, the United States FTC filed a lawsuit against Vemma Nutrition Company , an Arizona-based dietary supplement Multi-Level Marketing firm, accused of operating an illegal pyramid scheme. In December 2016, Vemma agreed to a $ 238 million settlement with the FTC, which banned the company from "pyramid scheme practices" including recruitment-focused business ventures, deceptive income claims, and unsubstantiated health claims. In March 2017, Ufun Store registered as an online business for its members as
2407-524: The Living Workshop takes the names of plants, calling the tiers "seed", "sapling", "blossom", and "lotus". Such schemes may try to downplay their pyramid nature by referring to themselves as "gifting circles" with money being "gifted". Others focus on sharing circles or educational themes around "abundance" to divert attention away from the unsustainable structure. Popular schemes such as "Women Empowering Women" do exactly this. Whichever euphemism
2490-720: The S&;L which failed in the late 1980s. As his Savings and Loan was Federally insured the bad loans ($ 68 million) were paid by the taxpayers. Criminal referral on Madison Guaranty fraud loans were given first to U.S. Attorney for the Eastern District of Arkansas, Paula Casey who declined to the seek prosecutions. Casey had been appointed to her post by President Bill Clinton and also had been his student. Federal special prosecutors later obtained convictions of 14 persons in Arkansas of more than 40 crimes. The defendants included
2573-689: The Whitewater fraud conviction, McDougal was released for medical reasons. After her release, McDougal's embezzlement trial in California began. McDougal was acquitted of all twelve counts of embezzlement [2] later in 1998. A suit in 1999 against Nancy Mehta for malicious prosecution was settled out of court. McDougal's trial for criminal contempt-of-court and obstruction of justice charges began in March 1999. The jury hung 7-5 in favor of acquittal for contempt of court, and found her not guilty on
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2656-517: The Whitewater fraud conviction, McDougal was released for medical reasons. After her release, McDougal's embezzlement trial in California began. McDougal was acquitted of all twelve counts of embezzlement [2] later in 1998. A suit in 1999 against Nancy Mehta for malicious prosecution was settled out of court. McDougal's trial for criminal contempt-of-court and obstruction of justice charges began in March 1999. The jury hung 7-5 in favor of acquittal for contempt of court, and found her not guilty on
2739-408: The biggest terms in this geometric sequence are at the end, most people will be in the lower levels of the pyramid; accordingly, the bottom layer of the pyramid contains the most people. The people working for pyramid schemes try to promote the actual company instead of the product they are selling. Eventually, all of the people at the lower levels of the pyramid do not make any money; only the people at
2822-625: The billing records "another of the meaningless mysteries of Whitewater." Alston Jennings was the Little Rock lawyer who represented Seth Ward. He visited the White House talked with Hillary and her lawyer David Kendall about the billing records. As the investigation expanded, Kendall went on to represent Clinton during the 1998–99 impeachment proceedings, and continues to represent the Clintons in miscellaneous civil matters. Vincent Foster
2905-448: The billing records "another of the meaningless mysteries of Whitewater." Alston Jennings was the Little Rock lawyer who represented Seth Ward. He visited the White House talked with Hillary and her lawyer David Kendall about the billing records. As the investigation expanded, Kendall went on to represent Clinton during the 1998–99 impeachment proceedings, and continues to represent the Clintons in miscellaneous civil matters. Vincent Foster
2988-403: The book room family quarters of the White House. Clinton said she had no idea how they got there. Billing records showed that she charged Madison for about 30 hours on work with Seth Ward over 4 months in 1985 and 1986. She and her lawyers said it was work with a development called IDC, thus the confusion. IDC was the company that sold the land to Madison. She said the only Castle Grande she knew
3071-401: The book room family quarters of the White House. Clinton said she had no idea how they got there. Billing records showed that she charged Madison for about 30 hours on work with Seth Ward over 4 months in 1985 and 1986. She and her lawyers said it was work with a development called IDC, thus the confusion. IDC was the company that sold the land to Madison. She said the only Castle Grande she knew
3154-419: The captain, who leaves, with everyone remaining moving up one tier. There are now two new captains so the group splits in two with each group requiring eight new passengers. A person who joins the scheme as a passenger will not see a return until they advance through the crew and co-pilot tiers and exit the scheme as a captain. Therefore, the participants in the bottom three tiers of the pyramid lose their money if
3237-411: The charge of obstruction of justice. McDougal received a full Presidential pardon from outgoing President Bill Clinton in the final hours of his presidency in 2001. (See List of people pardoned by Bill Clinton ) David E. Kendall was Ms. Clinton's personal lawyer. He announced the discovery of the Rose Law Firm billing records and turned them over to the Whitewater independent counsel. He said of
3320-408: The charge of obstruction of justice. McDougal received a full Presidential pardon from outgoing President Bill Clinton in the final hours of his presidency in 2001. (See List of people pardoned by Bill Clinton ) David E. Kendall was Ms. Clinton's personal lawyer. He announced the discovery of the Rose Law Firm billing records and turned them over to the Whitewater independent counsel. He said of
3403-459: The difference had Seth Ward put in the remaining $ 1.15 million. This money Ward borrowed from Madison Guaranty on non-recourse, no personal obligation to repay. If federal regulators found out, McDougal's S&L could be shut down, since it had already been operating under orders to correct its lending practices. Seth Ward , an Arkansas businessman and Webster Hubbell 's father-in-law, was hired by Jim McDougal to assist in land acquisition for
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3486-402: The ease of achieving this is offset because the depth required to recoup any money also increases. The scheme requires a person to recruit two others, who must each recruit two others, and so on. Prior instances of this scheme have been called the " Airplane Game " and the four tiers labelled as "captain", "co-pilot", "crew", and "passenger" to denote a person's level. Another instance was called
3569-571: The entire thousand acres that we referred to as IDC was being called Castle Grande . . . I was informed sometime within the last year or two that there was a trailer park on the IDC property called Castle Grande Estates. To the best of my recollection, that was the first I had ever heard of Castle Grande Estates. She also claimed that she could not remember her work on the project nor 15 conversations with Hubbell’s father-in-law, Seth Ward. Federal regulators said "The indictment against Susan McDougal details
3652-522: The entire thousand acres that we referred to as IDC was being called Castle Grande . . . I was informed sometime within the last year or two that there was a trailer park on the IDC property called Castle Grande Estates. To the best of my recollection, that was the first I had ever heard of Castle Grande Estates. She also claimed that she could not remember her work on the project nor 15 conversations with Hubbell’s father-in-law, Seth Ward. Federal regulators said "The indictment against Susan McDougal details
3735-402: The first eight investors . They would continue to buy in underneath the real investors, and promote and prolong the scheme for as long as possible to allow them to skim even more from it before it collapses. Although the "captain" is the person at the top of the tree, having received the payment from the eight paying passengers, once they leave the scheme they are able to re-enter the pyramid as
3818-507: The globe, under different aliases such as "loom circle" or "fractal mandala". The Blessing Loom scheme has been ruled as illegal in multiple US cities. Franchise fraud is defined by the United States Federal Bureau of Investigation as a pyramid scheme. The FBI website states: Pyramid schemes—also referred to as franchise fraud or chain referral schemes—are marketing and investment frauds in which an individual
3901-459: The maximum possible 18 months in prison for civil contempt, including 8 months in solitary confinement . Immediately afterward, on March 7, 1998, she began serving the two-year sentence for her conviction in 1996. Soon after, the Office of Independent Counsel indicted McDougal on criminal contempt-of-court charges, and charged her with obstruction of justice . After serving four months on
3984-403: The maximum possible 18 months in prison for civil contempt, including 8 months in solitary confinement . Immediately afterward, on March 7, 1998, she began serving the two-year sentence for her conviction in 1996. Soon after, the Office of Independent Counsel indicted McDougal on criminal contempt-of-court charges, and charged her with obstruction of justice . After serving four months on
4067-406: The mid-to-late 19th century in different guises. Some multi-level marketing plans have been classified as pyramid schemes. In a pyramid scheme, an organization compels individuals who wish to join to make a payment. In exchange, the organization promises its new members a share of the money taken from every additional member that they recruit. The directors of the organization (those at the top of
4150-452: The money you make is based on your sales to the public, it may be a legitimate multilevel marketing plan. If the money you make is based on the number of people you recruit and your sales to them, it's probably not. It could be a pyramid scheme. In contrast, pyramid schemes "may purport to sell a product", but often "simply use the product to hide their pyramid structure". While some people call MLMs in general "pyramid selling", others use
4233-643: The net worth of the S&L. Clark said Madison was one of the 3 worst cases of insider dealing that he did ever seen in his 20 years as an examiner. Hillary Clinton has said she did not work on the Castle Grande project, when questioned by two separate federal agencies and part of the Hillary Clinton and Whitewater probe "I don't believe I knew anything about any of these real estate parcels and projects. . . . " she said in an RTC interview in May 1995. But later Rose Law Firm billing records were discovered in
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#17327756624504316-527: The net worth of the S&L. Clark said Madison was one of the 3 worst cases of insider dealing that he did ever seen in his 20 years as an examiner. Hillary Clinton has said she did not work on the Castle Grande project, when questioned by two separate federal agencies and part of the Hillary Clinton and Whitewater probe "I don't believe I knew anything about any of these real estate parcels and projects. . . . " she said in an RTC interview in May 1995. But later Rose Law Firm billing records were discovered in
4399-635: The person at the front. Organizers can further profit by starting a scheme with a queue with shill names that must be cleared out before genuine people get to the front. The scheme collapses when no more people are willing to join the queue. Schemes may not reveal, or may attempt to exaggerate, a prospective joiner's queue position, a condition that essentially means the scheme is a lottery. Some countries have ruled that matrix schemes are illegal on that basis. While often confused with each other, pyramid schemes and Ponzi schemes are different. Pyramid schemes are based on network marketing , where each person in
4482-511: The project cost the public $ 4 million. Robert W. Palmer was the land appraiser for one of the Castle Grande loans, he later admitted to conspiring with Jim McDougal and others with Madison Guaranty savings association. The conspiracy was to inflate the estimates used for the loans. Kenneth Starr 's investigators found that Palmer inflated estimates used to support loans made to Gov. Jim Guy Tucker of Arkansas. Mr. Palmer did many appraisals for loans for Madison Guaranty. The larger appraisals
4565-411: The promise of payments (or services). As the number of members multiplies, recruiting quickly becomes increasingly difficult until it is impossible, and therefore most of the newer recruits do not make a profit. As such, pyramid schemes are unsustainable. The unsustainable nature of pyramid schemes has led to most countries outlawing them as a form of fraud . Pyramid schemes have existed since at least
4648-599: The prosecution was in excess of £1.4 million. A number of authorities around the world declared TVI Express to be a pyramid scheme in 2010 and 2011, including the Australian Competition & Consumer Commission , the Bank of Namibia , and the Central Bank of Lesotho . TVI Express, operated by Tarun Trikha from India, has apparently recruited hundreds of thousands of "investors", very few of whom, it
4731-410: The pyramid is tasked with bringing in their own subordinates and in turn profiting from their sales or recruitments. This fails because it essentially requires an infinite number of people to join the company. In a Ponzi scheme, however, participants are promised returns on "investments", supposedly into stocks or goods, but which are actually paid for by new investors, while a central leading figure takes
4814-410: The pyramid) also receive a share of these payments. For the directors, the scheme is potentially lucrative—whether or not they do any work, the organization's membership has a strong incentive to continue recruiting and funneling money to the top of the pyramid. Such organizations seldom involve sales of products or services with value. Without creating any goods or services, the only revenue streams for
4897-657: The regulators from finding Ward's loan and Madison's full investment in Castle Grande. The federal thrift examiners arrived the first week of March, 1986. The Dean Paul loan was completed on February 28. The loans did not miss the examiners. Jim Clark, the Federal Home Loan Bank Board Examiner-in-Charge at Madison, discovered that Seth Ward was behind the Castle Grande deal. The land was purchased illegally with Madison money. The Castle Grande loan like other loans were " pyramid scheme " intended to enrich institution insiders and bolster
4980-549: The regulators from finding Ward's loan and Madison's full investment in Castle Grande. The federal thrift examiners arrived the first week of March, 1986. The Dean Paul loan was completed on February 28. The loans did not miss the examiners. Jim Clark, the Federal Home Loan Bank Board Examiner-in-Charge at Madison, discovered that Seth Ward was behind the Castle Grande deal. The land was purchased illegally with Madison money. The Castle Grande loan like other loans were " pyramid scheme " intended to enrich institution insiders and bolster
5063-582: The riots, the Colombian government was forced to declare the country in a state of economic emergency to seize and stop those schemes. Several of the pyramid's managers were arrested, and prosecuted for the crime of "illegal massive money reception." The Kyiv Post reported on 26 November 2008 that American citizen Robert Fletcher (Robert T. Fletcher III; aka "Rob") was arrested by the SBU (Ukraine State Police) after being accused by Ukrainian investors of running
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#17327756624505146-465: The scheme are recruiting more members or soliciting more money from current members. The behavior of pyramid schemes follows the mathematics concerning exponential growth quite closely. Each level of the pyramid is much larger than the one before it. For a pyramid scheme to make money for everyone who enrolls in it, it would have to expand indefinitely. When the scheme inevitably runs out of new recruits, lacking other sources of revenue, it collapses. Since
5229-415: The scheme collapses. If a person is using this model as a scam, the confidence trickster would take the majority of the money. They would do this by filling in the first three tiers (with one, two, and four people) with phony names, ensuring they get the first seven payouts, at eight times the buy-in sum, without paying anything themselves. So if the buy-in were $ 5,000, they would receive $ 40,000, paid for by
5312-519: The scheme that would use Hale's SBIC as a pass-through to generate additional loans from Madison. Dean Paul, a friend and business associate of Hale's, borrowed $ 825,000 from Madison to buy three properties from David Hale. But Paul never used the money. It went instead to Hale, who used it to recapitalize his SBIC with matching funds from the SBA. Hale then loaned a $ 150,000 downpayment to Jim Guy Tucker and business partner, R.D. Randolph, who together bought out
5395-470: The scheme that would use Hale's SBIC as a pass-through to generate additional loans from Madison. Dean Paul, a friend and business associate of Hale's, borrowed $ 825,000 from Madison to buy three properties from David Hale. But Paul never used the money. It went instead to Hale, who used it to recapitalize his SBIC with matching funds from the SBA. Hale then loaned a $ 150,000 downpayment to Jim Guy Tucker and business partner, R.D. Randolph, who together bought out
5478-687: The sitting Governor, Jim Guy Tucker, who was forced to resign as well as Jim McDougal, Bill Clinton's partner in Whitewater. Since 1979, David Hale ran the Small Business Investment Corporation (SBIC), Capital Management Services, Inc., that was licensed to provide lending to minorities and the economically disadvantaged.The loans were matched and backed by the Small Business Administration (SBA). David Hale testified that he and Jim McDougal, with future-Governor Jim Guy Tucker , created
5561-501: The sitting Governor, Jim Guy Tucker, who was forced to resign as well as Jim McDougal, Bill Clinton's partner in Whitewater. Since 1979, David Hale ran the Small Business Investment Corporation (SBIC), Capital Management Services, Inc., that was licensed to provide lending to minorities and the economically disadvantaged.The loans were matched and backed by the Small Business Administration (SBA). David Hale testified that he and Jim McDougal, with future-Governor Jim Guy Tucker , created
5644-411: The system to be worth about 1/2 of that loan. Later when the loan went into default it was one of the largest losses to Madison, which collapsed in 1989 at a cost to taxpayers of $ 68 million. Palmer pleaded guilty on December 6, 1994 to Federal charges of conspiracy, related to Whitewater . He was sentenced on June 16, 1995, to 3 years probation with the first year home detention and was fined $ 5,000. He
5727-414: The taxpayers. Criminal referral on Madison Guaranty fraud loans were given first to U.S. Attorney for the Eastern District of Arkansas, Paula Casey who declined to the seek prosecutions. Casey had been appointed to her post by President Bill Clinton and also had been his student. Federal special prosecutors later obtained convictions of 14 persons in Arkansas of more than 40 crimes. The defendants included
5810-567: The term to denote an illegal pyramid scheme masquerading as a MLM. The U.S. Federal Trade Commission warns against becoming involved "in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products." Some commentators contend that MLMs in general are nothing more than legalized pyramid schemes. There are different laws in every state, and they take different actions toward pyramid schemes, but multi-level-marketing
5893-446: The top turn a profit. People in the upper layers of the pyramid typically profit, while those in the lower layers typically lose money. Since most of the members in the scheme are at the bottom, most participants will not make any money. In particular, when the scheme collapses, most members will be in the bottom layers and thus will not have any opportunity to profit from the scheme; still, they will have already paid to join. Therefore,
5976-537: Was Castle Grande Estates the trailer park, for which she did no work. Hillary Clinton told Barbara Walters on ABC in a Jan. 12, 1996 interview: "Castle Grande was a trailer park on a piece of property that was about a thousand acres big. I never did work for Castle Grande." "And so when I was asked about it last year [by the RTC], I didn't recognize it, I didn't remember it. The billing records show I did not do work for Castle Grande. I did work for something called IDC, which
6059-487: Was Castle Grande Estates the trailer park, for which she did no work. Hillary Clinton told Barbara Walters on ABC in a Jan. 12, 1996 interview: "Castle Grande was a trailer park on a piece of property that was about a thousand acres big. I never did work for Castle Grande." "And so when I was asked about it last year [by the RTC], I didn't recognize it, I didn't remember it. The billing records show I did not do work for Castle Grande. I did work for something called IDC, which
6142-703: Was Rose Law Firm partner with Hillary Clinton, he went with her to the Clinton White House as deputy counsel. At the Rose Law Firm he had been a billing partner and worked for on the Madison Bank & Trust accounts with Hillary Clinton. At the White House he was unhappy with work in politics and spiraled into depression , and in July 1993, he was found dead of a gunshot in Fort Marcy Park . Five official governmental investigations ruled his death
6225-456: Was Rose Law Firm partner with Hillary Clinton, he went with her to the Clinton White House as deputy counsel. At the Rose Law Firm he had been a billing partner and worked for on the Madison Bank & Trust accounts with Hillary Clinton. At the White House he was unhappy with work in politics and spiraled into depression , and in July 1993, he was found dead of a gunshot in Fort Marcy Park . Five official governmental investigations ruled his death
6308-631: Was a scheme run by Finnish criminals that involved about €100 million. The scheme started in 2005. In early 2006, Ireland was hit by a wave of schemes with major activity in Cork and Galway . Participants were asked to contribute €20,000 each to a "Liberty" scheme which followed the classic eight-ball model. Payments were made in Munich , Germany , to skirt Irish tax laws concerning gifts. Spin-off schemes called "Speedball" and "People in Profit" prompted
6391-466: Was for a $ 1.05 million loan to Gov. Jim Guy Tucker of Arkansas and an associate to buy a water and sewer system for the Castle Grande project. Later appraisals showed the system to be worth about 1/2 of that loan. Later when the loan went into default it was one of the largest losses to Madison, which collapsed in 1989 at a cost to taxpayers of $ 68 million. Palmer pleaded guilty on December 6, 1994 to Federal charges of conspiracy, related to Whitewater . He
6474-428: Was later pardoned by Bill Clinton in a controversial manner. Starting in 1982 Jim McDougal operated Madison Guaranty Savings and Loan. On April 14, 1997, McDougal was convicted of 18 felony counts of fraud conspiracy charges. The counts had to do with fraudulent loans made by Madison, the S&L which failed in the late 1980s. As his Savings and Loan was Federally insured the bad loans ($ 68 million) were paid by
6557-410: Was not related to Castle Grande." Walters asked." Was that Seth Ward?" Hillary Clinton replied "And Seth Ward was involved in that on behalf . . . " Barbara Walters: "Separate deal?" Hillary Clinton reply: "Separate deal completely." RTC lawyers interviewed Hillary Clinton in the White House, on Feb. 14, 1996, asked: RTC:" Can you explain to me what you mean by IDC and Castle Grande are, in your mind,
6640-409: Was not related to Castle Grande." Walters asked." Was that Seth Ward?" Hillary Clinton replied "And Seth Ward was involved in that on behalf . . . " Barbara Walters: "Separate deal?" Hillary Clinton reply: "Separate deal completely." RTC lawyers interviewed Hillary Clinton in the White House, on Feb. 14, 1996, asked: RTC:" Can you explain to me what you mean by IDC and Castle Grande are, in your mind,
6723-570: Was partially motivated by the collapse of Ponzi schemes ; however, they were widely referred to as pyramid schemes due to their prevalence in Albanian society. In 2003, the United States Federal Trade Commission (FTC) disclosed what it called an Internet-based "pyramid scam." Its complaint states that customers would pay a registration fee to join a program that called itself an "internet mall" and purchase
6806-405: Was sentenced on June 16, 1995, to 3 years probation with the first year home detention and was fined $ 5,000. He was later pardoned by Bill Clinton in a controversial manner. Starting in 1982 Jim McDougal operated Madison Guaranty Savings and Loan. On April 14, 1997, McDougal was convicted of 18 felony counts of fraud conspiracy charges. The counts had to do with fraudulent loans made by Madison,
6889-437: Was to inflate the estimates used for the loans. Kenneth Starr 's investigators found that Palmer inflated estimates used to support loans made to Gov. Jim Guy Tucker of Arkansas. Mr. Palmer did many appraisals for loans for Madison Guaranty. The larger appraisals was for a $ 1.05 million loan to Gov. Jim Guy Tucker of Arkansas and an associate to buy a water and sewer system for the Castle Grande project. Later appraisals showed
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