Bethpage-Tribune_1980-07-03

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BETHPAGE OLD BETHPAOi? PLAINVIEW
ISLAND TREES PLAINEDGE SEAFORD
VOL. 15 NO. 3 For The Week of July 3 - July 9,1980 20 cants par copy
Newsday & D.A. 's Figures Questionable as
Pyramid Clubs Sweep Long Island
by Wally M. Kalin
On Thursday, June 26, News-day
published an expose of a
"Pyramid Scheme" which
thousands of Long Islanders
already knew about, since they
had already "invested" $1,000
each in various pyramid charts.
At the time of the publication of
the article, the TRIBUNE was
also working on an article for
publication. Though the way the
pyramid meeting is run, was
reported accurately by Newsday
reporter Laura Durkin (who
attended the money game
meeting in the guise of a,
prospective buyer) statistics
furnished to Newsday by the
District Attorney's Office were
highly questionable. Those same
statistics were also furnished to
the TRIBUNE by District
Attorney Dennis Dillon's office.
On Wednesday police raided an
alleged pyramid game and
arrested three "promoters". In
attendance at the meeting were
former Suffolk County District
Attorney, Henry O'Brien and
former Babylon Town Supervisor
Joseph Stabile. Evidently,
O'Brien and Stabile had nothing
to do with the raid. They were in
attendance as "observers", as
was I for the TRIBUNE at a
different meeting in Huntington.
That meeting was not raided.
This latest variation of the
pyramid began . in California,
ran for about eight months and
then died out in mid-May when
arrests and raids helped to
hasten its collapse. It is believed
to have started on Long Island in
late May or early June.
The pyramid works like this.
There are seven levels which
make up the pyramid. The first
and second levels (or boxes) are
inhabited by one person. The
person in the very top box (call 0
level) is in the catbird seat.
Every new investor signing on
the chart gives the person in the
top box $500. The new investor
also gives the person above the
box he is buying $500. This way
people in the game don't have to
wait until they reach the top
before regaining their initial
investment. The new people
signing in are at level 16 (see
chart), levels 1, 2,4and8already
being full. When two-people in
level 16 have signed under the
box in Level 8, the person in that
box on level 8 has received $500
from each player under him.
When level 16 is completely filled,
all of the people on level 8 have
recouped their money, the person
on level 0 has received $8,000 and
is crossed off the pyramid. Since
level 0 is also listed on another
chart, he supposedly will collect
another $8,000 from that chart
which brings him to a total of
$16,000.
With level 0 out of the game,
level 1 begins to collect as people
sign up on the bottom level - 32.
As that level fills up the people on
level 16 begin to recoup their
investment. When all the boxes
on level 32 are filled, the person in
level 1 has collected $16,000 and is
out of the game. The chart now
splits four ways. Each person
formerly in level 4 goes to level 1
in the new chart. The person
formerly in level 2 goes to level 0
in two charts and the cycle begins
again with people signing in on
level 16. Only now instead of one
chart there are four.
According to District Attorney
Dillon, "The number of people
needed to keep the chain going,
becomes enormous quickly. For
the game to go through 10 full
cycles, 16,777,000 persons would
have to invest."
Assistant District Attorney
John McNally adds that in order
for everyone, who starts in the
initial pyramid to make the
$16,000 jackpot, 16,384 persons
must participate. Both these
figures are totally inaccurate.
First, let's take Assistant D.A.
McNally's statement of 16,384
persons must participate in order
for the people in the initial jack­pot
to collect their $16,000.
In order for the first 63 people
in the chart to go through the
cycle and each collect $16,000,
2,735 people must buy in. That is a
total of $2,735,000 invested. The
initial 63 investors collect a total
of $1,008,000 ($16,000 each) and
they will be off the chart. In
addition, 1727 people will have
recouped their $1,000. 801 people
spread over 49 charts (that initial
chart split itself 12 times) are
awaiting'1602 people to sign on.
The total again, 2,735 people to
put the initial 63 investors over.
Not 16,384 as McNally has stated.
After the very first split of the
very first chart, any new
investor signing on the bottom
line of a chart requires 256 people
to put him over the top. That's 256
people on his charts. This figure
never deviates. No matter how
many charts are in operation,
and no matter what chart an
investor signs on, it is always
going to take 256 new players to
put him over. In order for a chart
to cycle 10 times, 27,350 people
must be playing. They will have
invested $27,350,000. 630 people
will have collected $16,000 each;
16,646 people will be even and if
the game ends at that point,
10,080 people will have lost $1,000
each for a collective total of
$10,080,000 which is the exact
collective total that the 630
winners will receive. In other
words, for every person who wins
$16,000, their must be 16 losers.
That's the bottom line.
Since the figures that the
District Attorney's office
released, and Newsday published
are so far-off, the pyramid
players are up in arms. Many
feel they are getting ripped off
because the adverse publicity
contains "preposterous state­ments."
If the D.A.'s office has
exaggerated people figures, they
have gone just the opposite in
dollar figures. Dillon's office
says, "...as many as 4,000
persons may have exchanged as
much as $512,000."
If there are 4000 players on the
charts, then $4,000,000 must have
changed hands. And if 4,000
people are playing, then their
must be at least 75 charts in
operation (if only 63 are in
operation then the top box will
have gone out in every instance).
And if there are only 75 charts in
operation, then the game is not
yet through its second cycle.
But the game may not make it
through its second cycle.
Because of the publicity, and
Monday's raid, the game has
come to a virtual standstill.
At the meeting I attended there
was such confusion and fear, that
I decided to reveal my purposes
and act as the leader for the night
in a special press conference that
might shed some light as to the
current participants course of
action. We did not read the fourth
amendment, which supposedly
protects the players from entrap­ment,
nor did we keep the doors
closed. Anyone could have
attended. In fact I would have
welcomed the police, to get their
viewpoints on the legalities or
illegalities of the game.
The conclusion of the meeting
left two things certain. The
players in the top level were
going to get a lawyer to check out
their legal rights and the game,
at least in the area I attended,
would be suspended for a short
while.
Meanwhile, Newsdays story on
the raid left former District
Attorney O'Brien's participation
in the pyramid in a very cloudy
state. At least it did to this
reader. Here is what O'Brien
later said to the New York Times.
He agreed to represent one of the
alleged "organizers" who was
arrested in the raid.
O'Brien stated, "Everyone
there* (at the meeting) fully
realized the risk involved." He
told the Times in a phone
interview that there was no fraud
involved, that people knew what
they were doing, realized it was a
gamble and that the pyramid
could not go on forever. He felt
that with as many other crime
problems as we have here, this
pyramid game should not get so
much attention.
I agree, with Mr. O'Brien. The
people I have seen at these
pyramid parties are at least as
upright as the people who attend
OTB and the racetracks. It may
be time for District Attorney
Dillon to conduct a public
meeting on the Pyramid game. I
think I'd like to see Mr. O'Brien
express his viewpoints also.
Especially in the light of what the
District Attorney's office calls
statistics.
One time rights to the Bethpage Tribune
Copyright 1980 Wally M. Kalin