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Local pyramid schemers warned Authorities say `gifting clubs' are just a scam By CHRIS BRISTOL Sound investing typically does not involve clandestine meetings with strangers in dark parking lots, a bag full of cash clutched at your side. But that's exactly the way transactions are being handled in the dumb-and-dumber netherworld of the latest pyramid scheme to afflict Southern Oregon, a so-called "gifting club" that authorities say is certain to leave lots of hard feelings and lawsuits in its ruinous wake. The scheme is known by many names, but Northwest Family Reunion and Jubilee seems to be the most common. Authorities say it is active throughout the region, including the Rogue Valley and Klamath Falls. Participants pay $2,000 to join, with the promise their "gift" will mushroom into a $16,000 payoff as they climb toward the top echelon with every new recruit. Such schemes, which crop up with alarming regularity in the Northwest, are illegal because, mathematically, the pyramid always collapses as new participants find it harder and harder to find new recruits. "This is all driven by greed," said Jan Margosian, a spokeswoman for the state Department of Justice in Salem, "and greed gets in the way of clear thinking sometimes." Earlier this week, Medford police visited two local men to hand-deliver a letter from an Oregon assistant attorney general. The visit was not social. "If you are involved in a pyramid club, you must cease your involvement immediately," the letter warned, threatening a civil penalty of up to $25,000 for each recruit. Margosian said the letter was based on a tip that the men were conducting large meetings to recruit new participants. A rumored meeting Sunday at a local restaurant never happened, so the police delivered the letter Tuesday at the men's homes. Margosian identified one of the recruiters as Johnnie Lee Scott, a 58-year-old Medford man who had his insurance license revoked last year over allegations that he ripped off elderly clients and participated in a $90 million viatical scam masterminded by a pair of con artists in Palm Springs, Calif. According to court records, Scott is embroiled in at least five lawsuits in Jackson County Court involving his former New Life insurance practice. Three of the five cases are scheduled for trial next month. Scott, of 1221 Skeeters Drive No. 8, did not return a phone call Thursday seeking comment. A young man who answered the phone said Scott was not home and probably wouldn't return the call. The other man was identified as Johnny Walter Millard, 65, of Butte Falls. He also could not be reached for comment. Margosian said anybody who gets bilked in the scheme should not, repeat not, bother to call authorities. The Department of Justice takes a dim view of participation in pyramids. "We might just come after you, too," she said. "We don't consider you a victim." Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA