Sunday 05th of September 2010
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Written by Bob Firestone
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Tuesday, 09 June 2009 00:00 |
It has become almost impossible to look for home business opportunities with out getting bombarded by offers to join "Cash Gifting Programs" (CGP). Part of the commitment made by the National Home Business Academy is to evaluate opportunities and provide a honest opinion. After a substantial amount of research the NHBA has come to the conclusion that cash gifting programs are something to be avoided. There are a large number of these programs and this article does not discuss any program in particular it is a review of the entire business model/concept. We are not lawyers, but looking at how CGP's operate it sets off all the red flags of an illegal activity. The programs look like nothing more than illegal pyramid schemes. The arguments made by those who are pro-CGP do not settle the nerves and actually increase the skepticism that these are legitimate. Red Flag #1) Nothing moves but money. The classic definition of a pyramid scheme is that no product is sold and members are paid for the sole activity of recruiting. In CGP's there are no products and the various programs and promoters are very happy about that. This is a major problem. In illegal pyramids there is a mathematical certainty that the bottom 80-85% of those who participate will lose. The promoters try to use technical detail arguments trying to work around these facts but the math is the math. In a legitimate network marketing business participants even those on the very last to get in have the opportunity to sell actual product and build a successful business. Red Flag #2) The money you receive is tax free! Not really. The promoters seem to love to quote and tell you exactly where in the tax code you can find the information that makes CGP ok. Reviewing the section of code the promoters neglect to mention is the can be no expectation that the person giving the gift will receive anything in return. If you look at any of the websites promoting CGP it is very clear that there are high expectations that you will make money from this activity. The code that is quoted is clearly describing a situation where family and friends give cash gifts to each other not these large scale programs. Reality the IRS will be the last people to go after you but hey it was the taxman who took down "Scarface" Al Capone. Red Flag #3) "Our lawyers have found a loophole" The promoters say that their lawyers have found a loophole in the law and that by having everyone who joins the CGP sign a paper saying they have no expectations of getting anything in return for joining the program makes it legal. Again not a lawyer, but when compared to all the marketing materials used to entice, I have serious doubts that any judge or jury is dumb enough to believe that the people had no expectations of making money, signed paper or not. Red Flag #4) There is a history of prosecution CGP's have a long history of getting shut down and the participants being prosecuted. There are cases in almost every state where CGP's have been shut down and the people in the organization have been prosecuted not just the people at the top. Based on past prosecutions simply joining the program can make you criminally liable. Red Flag #5) Secret Meetings The meetings and conference calls where the promoters solicit gifts are by invitation only. Granted part of it could be attributed to the illusion of exclusivity, but that seems like a stretch. More likely is that they want to prevent any law enforcement or disgruntled participants to have easy access to the sales pitch. Red Flag #6 Banking Tips There are numerous reports of promoters giving directions on how to handle the cash to not arouse suspicion when you deposit in your bank. Banks have strict guidelines and sophisticated systems to identify suspicious banking activities. These are in place to find illegal activities such as money laundering, drug dealing supporting terrorism and other criminal activities. No one wants to be examined for their banking actions if you are not doing anything illegal that shouldn't be a problem. This may just be a rumor, but the idea circulating makes one believe the idea is grounded in need. A Challenge to Cash Gifting Promoters The promoters of the various CGP are very admit that what they are doing is completely legitimate and to that we say great. If you are a promoter in the US who wants to prove your program is 100% legal take everything to the local district attorney and state attorney general. If you can produce a verifiable review that the program is not against the law we will post them here. If you are thinking about joining a cash gifting program the NHBA highly discourages it and believes they are against the law.
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