Attorney General's News Release

April 15, 1997

Criminal charges filed against five who allegedly promoted pyramid scheme in southwest Missouri

Jefferson City, Mo. — Attorney General Jay Nixon has filed criminal charges against five McDonald County residents for allegedly promoting a pyramid scheme that was described as "Friends Helping Friends," "People Helping People," "The Support Network" and "The Board Game." The charges follow investigations by Nixon's office and the Secretary of State's Office.

The felony complaints were filed yesterday in McDonald County Associate Circuit Court against Reed Paul Holly, 60; his brother, Wallace E. Holly, 71; Howard Lee Jacobs, 49; Rose Marie Williams, 55; and her husband, Tommy M. Williams, 59. Jacobs and Wallace Holly face two counts of unlawful pyramid sales scheme, while the other defendants face five counts each on the same charge.

The charges allege that on various dates in December 1996 and January 1997, the defendants offered participation in a pyramid sales scheme in McDonald County. Nixon said that participants would pay $2,000 for the opportunity to progress through the four levels of the organization and cash out with a payment of $16,000.

"Pyramid schemes are both illogical and illegal," Nixon said. "It doesn't take long to reach levels where an astronomical number of participants are needed to support this house of cards, resulting in a collapse that leaves most participants holding the bag."

Secretary of State Rebecca McDowell Cook issued an alert to Missourians in December, warning them that southwest Missouri seemed to be targeted by the pyramid scheme after it was active in Kansas and Oklahoma. The Securities Division of the Secretary of State's Office issued cease and desist orders in January and March against further promotion of the pyramid scheme.

"Missourians need to be aware that these opportunities to make fast cash which often appear too good to be true usually are just that -- too good to be true," Cook said.

Nixon said that pyramid schemes also can cause problems and confusion by using names that are associated with legitimate enterprises. People Helping People, for example, is also the name of an established charity in Republic, Mo., that was recently given national recognition for its work to help needy families, and Nixon said the two should not be confused.

Missouri law defines a pyramid sales scheme as an operation where the primary source of income is achieved through the recruitment of other participants, not the sale of goods or services. In addition to the criminal provisions, state law also says anyone who recruits participants for a pyramid scheme can be sued for twice the amount the recruit paid.

The charges against the defendants are class D felonies, punishable by up to five years in prison and a $5,000 fine on each count. As in all criminal cases, the charges are merely accusations, and the defendants are presumed innocent until, or unless, proven guilty in a court of law.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818