Deirdre M. Daly, United States Attorney for the District of Connecticut, announced via press release that Nancy Dillon, 69, of Guilford, pleaded guilty Monday to a federal tax charge related to her participation in an illegal pyramid scheme known as “Gifting Tables.”
In 2009, Dillon received $40,000 while participating in the Gifting Tables scheme. Even though she had been advised by an attorney that the money was taxable income and not a gift, she failed to pay federal income taxes on the money she received, a press release states.
Dillon pleaded guilty to one count of willful failure to file a return, supply information or pay tax, a charge that carries a maximum term of imprisonment of one year and a fine of up to $25,000. Judge Thompson scheduled sentencing for September 24, 2014.
According to court documents and statements made in court, a Gifting Table is configured as a four-level pyramid, with eight participants assigned to the bottom row, four participants assigned to the third row, two participants assigned to the second row, and one participant assigned to the top row, the press release states.
The top row participant is referred to as the “Dessert,” the two participants on the second row as “Entrees,” the four participants on the third row as “Soup and Salads,” and the eight participants on the bottom row as “Appetizers.”
To join a Gifting Table, new participants were required to pay $5,000, typically cash, to the Dessert, that is, the participant occupying the top position on the pyramid.
The $5,000 payment, which was fraudulently characterized as a gift, secured the new participant a position as an Appetizer on the bottom row, the U.S. Attorney's press release states. Participants progressed from the bottom row of the pyramid by recruiting additional people to join the Gifting Table.
When eight new participants joined a Gifting Table, each having made a $5,000 “gift” to the person occupying the Dessert position at the top of the pyramid, the Dessert left the Gifting Table and kept the $40,000 paid by the eight new participants.
That particular Gifting Table was then split, with the two participants occupying the Entree position on the second row moving to the top position (Dessert) of two new pyramids. The other incumbent members of the Gifting Table moved up a row on one of the two newly-formed pyramids, and the search for 16 new participants began.
The success of the Gifting Tables depended on new participants joining and making the $5,000 “gift,” the press release states.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation Division and prosecuted by Assistant U.S. Attorneys Douglas P. Morabito and Peter S. Jongbloed.