Every few months a new “Get Rich Quick” pyramid Network Distribution business spreads like wildfire around town and relieves thousands of families of their hard earned money. They prey on those unfamiliar with these scams, especially on people that are hard pressed for extra cash and are looking for a quick and easy way to make some money. Kollel families are easy prey!
While those on top can actually make thousands of dollars, those much further down the chain may come out losing their entire investment. But who cares about the bottom, as long as they can make it rich nothing else matters! While many of these scams are perfectly legal, they may be against Halachah for a variety of reasons, which we will discuss later. Since many people are unaware of how these very clever pyramid scams work and what the pitfalls are, we advise them to seek the advice of those that have studied them with great care. They persuade (brainwash) people to join, by enticing them with the millions of $ that can be made if you are a cunning, clever and conniving salesperson. They blind people by telling them about the people that have become rich from these scams.
Some of these pyramids are devised so cleverly that they seem perfectly safe to the untrained eye. One of the new pyramids that’s making the rounds is called JewelWay. You can buy in for $750 and up, for which you actually receive jewelry which is supposedly (!?) worth that amount. (Note: A careful study showed that the price listed in the catalogue was exorbitantly over inflated).
One must then sell at least $750 worth of Jewelry to each of two others who must sell it to two others and so on down the line. The more jewelry that gets sold, the greater the commission one receives. There’s lots of money to be made if they succeed with the chain, yet like every pyramid chain, it very quickly reaches a saturation point and many people are left holding the bag.
Rabbonim must familiarize themselves with the working of these pyramids so that when their Bal Habatim seek their advice, they will know what to answer them. It may also help if they would alert their congregations, so that they shouldn’t fall prey to them.
Many people claim that they asked their rov about it and that they had gotten their approval and blessings. Obviously the person asking the question didn’t really present them with the inherent problems of these scams. The way they explained it, (“Rabbi, can I invest $750 in a great jewel business”) everything sounded kosher. Some of the Halachic ramifications are;
1) The product they are selling is usually highly over-inflated in price. (This is necessary in order to pay the distributor a lucrative commission). This may touch upon lifnei ivar and genavah or genayvas daas.
2) Since all pyramids of this sort must eventually reach a dead end and those who come in toward the bottom (the saturation point) will lose their money, those selling them the merchandise are really misrepresenting the deal. (To learn how quick the saturation point is reached, see P.S. below.)
We advise those who want to get more information on these “get rich quick and easy” business deals, to contact those more familiar with them before falling for these scams. (This is but one of the many scams making their rounds these days and it’s important that people understand how they work.)
One can contact Rabbi Yisroel Belsky at 941-0112 for more information on these types of deals.
Remember! While it’s a great mitzvah to help people earn a living, it’s also a grave sin to allow people to be cheated out of their hard earned money.
Rabbi Eli Teitelbaum,
Tel-718-633-1909 Fax 718-435-0191
P.S. To understand how this pyramid chain very quickly reaches the saturation point (a dead end) lets do some simple math. If a chain starting with only 2 people were to continue for only 15 deep, meaning that each one person in this chain were to get only 2 others to join under him, then the total number of new distributors for this product would now be 65,536. (These are only the NEW distributors and doesn’t even include the ones who already bought in from before which amounts to another 65,535) If we continued this chain 25 deep we would wind up with 67,108,864 new distributors and the chain is only 25 long. (Add to this another 67,108,863 people that have already bought in from before and you have a total of 134,217,727). Just continue on with the chain and you’ll very soon run out of people in the entire world. I just wonder to whom one can sell the product if everyone in the world is a distributor unless they all sell it to each other like they did in Chelm!
The above calculation was made taking most of the world into consideration and also assuming that you came in on the very beginning of the chain. It also assumes that everyone out there has the $750 and is stupid enough to buy into this deal. Obviously the few Jewish neighborhoods will reach their saturation point (dead end) much, much quicker and therefore the entire pyramid comes crashing down before it has even reached 15 deep. After all, there is definitely a limit to how many people will buy into this so-called ticking time bomb. True! Thousands of people will make lots of money yet simple math shows that it is inevitable that millions of others will be left with a product that they will be unable to sell any further. Who cares what happens way down the line? Rabbonim should!
P.P.S. I just wonder what would happen if milk and eggs are sold by this Network Distribution method?
To prove the power of a pyramid I ask that each person receiving this letter please mail or fax it to two others.