ESSEX WOMAN PLEADS GUILTY TO FEDERAL TAX CHARGE STEMMING FROM ROLE IN “GIFTING TABLES” PYRAMID SCHEME
David B. Fein, United States Attorney for the District of Connecticut, announced that BETTEJANE HOPKINS, 67, of Essex, pleaded guilty today before Chief United States District Judge Alvin W. Thompson in Hartford to a federal tax conspiracy offense stemming for her involvement in a pyramid scheme known as “Gifting Tables.”
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 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. Participants moved from the bottom row of the pyramid and progressed through a Gifting Table by recruiting additional people to join. 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.”
From approximately 2008 to 2011, HOPKINS and others oversaw and profited from a Gifting Tables scheme operating primarily in Connecticut’s shoreline communities. HOPKINS and others falsely stated to recruits and new members that monies given and received in Gifting Tables were legally considered tax-free “gifts” under the Internal Revenue Code, and that lawyers and accountants had approved Gifting Tables as legal ventures. HOPKINS and others also advised and counseled participants not to report on their tax returns monies received through their participation in the scheme, or deposit a large amount of cash into bank accounts, which would require the bank to report the sum to the IRS.
The investigation further revealed that in an email to a participant on January 17, 2009, HOPKINS stated “My goal was to come up with 80k GREEN BEANS this year. It is going to happen, it could also be 120k, who knows. This is awesome!”
In an email on October 2, 2009, HOPKINS asked her co-conspirators “Are you worried that this will blow up like it did in Naples? We need to keep silent and under the radar.” The investigation has revealed that HOPKINS and others also participated in a Gifting Tables scheme in Naples, Fla., and that it had been detected by Florida law enforcement.
HOPKINS received at least $89,500 from her participation in the scheme, none of which was reported on her individual income tax return.
HOPKINS pleaded guilty to one count of conspiracy to defraud the Internal Revenue Service. Chief Judge Thompson has scheduled sentencing for March 22, 2013, at which time HOPKINS faces a maximum term of imprisonment of five years, a fine of up to $250,000, an order of restitution to victims of the Gifting Tables scheme, and back taxes, penalties and interest.
HOPKINS has been released on bond since her arrest on May 2, 2012.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation, and is being prosecuted by Assistant United States Attorneys Douglas P. Morabito and Peter S. Jongbloed.
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