As “Chloe” headed to a friend’s Bay Area home to do some spiritual work, she had no clue she was about to get sucked into a pyramid scheme. “The topic of abundance came up, and my friend touted it as this amazing parallel economy,” says Chloe, whose name has been changed for this article. So, last September, she ended up borrowing half of the $5,000 “gift” required to join her friend in a women’s “gifting circle.” Chloe says she trusted the women involved—they made her feel special, as though she’d been hand-selected to join, and the promise of moving up through different levels where she’d eventually be “gifted” $40,000 didn’t hurt either.
Gifting circles have been around for years, but the latest iteration—think The Secret meets Bernie Madoff—is cloaked in the language of abundance, spiritual growth and law of attraction. “This is a group of women who work in pretty high-end spiritual stuff,” explains Chloe, who was recruited into a group where the top-level member, known as “dessert” in circle parlance, was from Sebastopol. With rising suspicion upon learning about the complicated backing system, feverish recruitment efforts and progressively stringent (and secret) guidelines, Chloe started doing her own research into the collapse of similar circles in Oregon. That’s when she realized that her wisdom “circle” looked suspiciously like a pyramid.
Circles like Chloe’s have been going around for years, by different names—Women’s Integrity Group, Women Helping Women, Women Empowering Women, Circle of Friends, Wisdom Circles—but all carry a basic (unspoken) premise: Give a “gift” of money and it will come back eightfold. Participants join at the “appetizer” level, moving through “soup and salad” into “entrée” and finally “dessert,” wherein $40,000 arrives via new recruits. The circles are often pitched as a means to women’s economic empowerment, or as an alternative to standard banking systems and male-driven economic structures. (Considering 24 million women in the United States live below the poverty line, and countless others have little to no savings, investments or retirement funds, alternative economies can be an alluring prospect.)
“It’s becoming madness,” says “Jordan,” a young herbalist who became involved in a Women’s Wisdom Circle last February in the Santa Cruz area, who also asked that her real name not be used. Jordan compares the profligate growth of circle culture among her Burning Man-loving friends to a virus, one that quickly reached a saturation point. “There was nobody left to invite,” she recalls.
Jordan says she was drawn in by promises of a living workshop with built-in leadership training, and the fact that all of her friends were doing it, despite initial misgivings that “something was not right.” She enjoyed the weekly sisterhood phone conferences centered around empowerment, esteem-building and manifestation of dreams. But after nine months, Jordan became uncomfortable with the constant push to invite other women into the circle (she was encouraged not to use the word “recruit”), even if it meant convincing them to go into debt to procure the $5,000 entry “gift.” She asked to be gifted out, and describes how the group leader brought her to tears after suggesting that she couldn’t move past her “blocks” enough to let the money go.
“They made me feel less evolved for wanting to drop out,” Jordan explains. Now, good friends still entrenched in “circle culture” won’t return her calls.
Jordan describes a culture of willful blindness, blind faith and good intentions gone south that infused her particular circle. When one “Senior Sister” (the name given to women who have gone through multiple circles and now act as mentors to new circlers) was asked during an “Invitation Inspiration Call” about the sustainability of the whole enterprise, she said she wasn’t a math person, and changed the subject.
One woman who’s unafraid to do the math is Amber Bieg, a 33-year-old economic planner and sustainability consultant from San Francisco. Bieg first came across gifting circles in 2012. During a spiritual ceremony in Nevada City, she confessed to the woman next to her that she yearned to move to the area, but she and her husband were short the $40,000 needed to make it happen.
“She got really quiet and said, ‘I know where you can get the money and get the sisterhood you’ve been craving,’ ” Bieg recalls. That same week, a friend from Marin sent out a circle invitation. Soon, it occurred to Bieg that 90 percent of the women she knew were either involved with or had been asked to join a gifting circle. This is when the MBA dug in and did the math that others had refused to acknowledge.
What she discovered was more Ponzi Scheme than sacred geometry—a perversion of the law of attraction. “It’s governed by the endless chain scheme law,” explains Bieg. “It’s like a chain letter, but there’s money involved and it perpetuates itself and requires infinite growth. The problem is, we don’t live in an infinite system. We live in a finite system.”
“It has to collapse inevitably,” says Bieg. “And when it does, the more people involved, the more people get hurt.”
Bieg created an online slideshow—it’s received over 25,000 views as of September 2013—that lays out the math in plain language. Whether in the guise of a wisdom circle, fire circle, medicine wheel, vision sisters or root sisters, gifting circles will indubitably leave 88 percent of its participants in the financial cold.
The legal ramifications are serious. Anyone who participates or operates in an “endless chain” scheme is in violation of section 327 of the California Penal Code,” explains Roxanne Olsen, a lawyer from Santa Cruz, who breaks down the legality of the latest breed of gifting circles in a recent post titled “Gifting Circles: Just How Illegal Are They?” A quick look at newspaper headlines reveals felony convictions for leaders of circles in Connecticut, Maine, Hawaii, Michigan and Sacramento.
For those who want true economic empowerment, Bieg suggests looking into Lending Circles or legitimate women’s philanthropic groups that pool money to invest in woman-centered businesses. Or find a group that promotes emotional and spiritual investment—without asking for a chunk of money. Sadly, for the women who get caught up, ultimately “gifting circles” offer neither empowerment nor financial stability.
“A lot of these women who get involved, when they get the $40,000 it’s gone within six months, so it’s not really spent in a way that changes lives,” Bieg says, “and the women who gave them the money are out $5,000 each as well.”