BRANFORD, Conn.(WTNH) — A Branford woman accused of participating in a pyramid scheme was sentenced in federal court Wednesday.
Nancy Dillon, 70, was sentenced Wednesday in Hartford to one year probation for failing to pay taxes on income she received while participating in an illegal 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, to the participant occupying the top position of 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 progress 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. The success of the gifting table depended on new participants joining and making the $5,000 gift.
In 2009, Dillon received $40,000 while participating in the gifting table 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.
On June 30th, 2014, Dillon pleaded guilty to one count of willful failure to file a return, supply information, or pay tax.
Today, U.S. District Judge, Alvin W. Thompson issued that Dillon serve her first six months of probation in home confinement. Thompson also issued Dillon to perform 100 hours of community service, pay a $2,000 fine and back taxes, penalties and interest.
This is a matter being investigated by the Internal Revenue Service- criminal investigation division and prosecuted by the assistant U.S. attorney’s Douglas P. Morabito and Peter S. Jongbloed.