Spiritually transmitted disease: The poison lotus
The lotus seed was planted at the Nelson Market on a sunny Saturday morning. Fran Halford bumped into a friend who mentioned an "amazing network". It was for creative, caring, charismatic women wanting to become financially independent. Women empowering women, all over the world – a "sacred sisterhood".
Halford, a medical doctor with a passion for the Chinese healing art qi gong, was working emergency shifts on the weekend to support her three sons as a single mother. She was ready for a break.
"I was already developing my alternative career as a coach and a writer," says the effervescent 43-year-old from the kitchen of her rustic cottage on "Magic Farm" in the Moutere region. "And I wanted to spend more time with like-minded women who are into personal growth."
Her enthusiastic friend introduced her to an older local business owner who was equally raving about this "living workshop". Not much was made of the money, at first. "They said it is nothing compared to what you get. That it's life changing."
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Whether lives are changed for the better or the worse by "gifting circles" is currently being asked around the world by community activists and women's advocates, by lawyers and economists, on social media and by those in the throes of broken friendships. In August, the Better Business Bureau of Canada put out an official warning about them.
Essentially a pyramid scheme, disguised as a touchy-feely, nurturing, empowering circle, the movement is a hot topic from California to Hawaii to Byron Bay, but is seldom a topic of open discussion.
Those involved aren't allowed to talk and those who've walked away are often ashamed. Some are in jail, having been convicted of fraud. For the vulnerable, the embracing new-age rhetoric blurs the fact that the scheme is unsustainable, designed to leave behind a few big winners and many losers, with only about 12 per cent of members ever making a profit and the rest recording a loss.
Pyramid schemes are nothing new to New Zealand and often target those at the bottom of the socio-economic heap wanting to escape poverty. This one, brought to New Zealand from an ex-pat hub in Bali almost four years ago, comes with a sophisticated twist. The ones who champion the movement – there is no website, no registered organisation, just "friends telling friends" – talk about the "Law of Attraction" and claim their actions are legal because you can privately gift money in New Zealand up to any amount.
Their beautifully packaged offer of support, self-reflection and sisterhood seems to fill a need in a male-dominated world where many women long for deeper connections and less competition with each other. It's like the modern version of an ancient tribal gathering around the fire where stories are told and hands are held.
The appeal that goes straight to the heart is so strong that hundreds of Kiwi women (and an estimated 300,000 in the US) have "circled" under the radar of the law, often unbeknown to their friends and families. They are midwives, filmmakers, dancers, nurses, actors, wedding celebrants, massage therapists, Maori healers, cabin crew, astrologers, PR consultants.
The old spell under a new disguise has been spreading like a social epidemic in more alternative communities such as Titirangi and Golden Bay where some of the original women's groups on the ground are now waning because of this seemingly more attractive option. Recently a dinner party in the "Bay" was interrupted when guests had to be on their "circle calls" in front of their laptops at 8pm. It is so rife that warnings went up on the Takaka Noticeboard Facebook page this year and in other places.
A photographer in Northland started a crowd-funding campaign for her investment money into a gifting circle. When she realised what it really was she posted about the "insidious, creeping taint" she found so scary: "We need to talk openly about this trap."
But talking openly goes against Circle's basic tenets.
Fran Halford is one of the few women in New Zealand to speak up, more with amazement and compassion than anger. Even with a sense of humour. The British-born doctor offers a diagnosis from her Nelson kitchen: "It's a spiritually transmitted disease."
To join Circle it costs US$5000 (about NZ$7000). Not as a fee or an investment, Fran was told, but an "unconditional gift" to the Lotus, the woman in the middle of each group of 15. Fran would come in as a Seed, would then move on to Sapling, then Blossom and finally be a Lotus herself to receive her gift of US$40,000 from eight new women, plus a whole lot of coaching and sisterly support on the weekly group calls online. The amount is in US dollars, converted to New Zealand currency. Despite claims the New Zealand Circle system is nothing like the controversial US one, it appears to operate in essentially the same way.
All the meetings are done via computer, with some group members based in Australia or further away. The two Nelson women sent Fran guidelines over the next months and urged her to keep it all "private", especially from men. "They had this evangelical glow and chased me hard. I trusted them since they are both respected professionals in our community and wouldn't be doing anything ridiculous. Really lovely women."
The "invitation call" – her first webcam meeting with the group – took place in a "Special zoom room for Fran Halford". The friend from the market raved about her personality and accomplishments. "A Nobel Prize Winner speech for a goddess," says Halford, cringing behind her blonde mane. "They were all super-nice, super-welcoming. Their language spoke straight to my heart."
The potent mix of ego-stroking and emotional intimacy worked. A few months later, Halford asked her bank for a loan. She joined Circle last Christmas and transferred the money to the businesswoman who was the Lotus. When the Lotus had her eight "gifts" and went into another Circle, they sent the lucky lady off in a "birthing ceremony" at her house. "She gave us each a little brooch and a lip balm. Everyone was crying about how amazing she was," remembers Halford. "It was all a bit forced."
There were ominous "senior sisters" in the background who had birthed at least twice – reaping the equivalent of more than $100,000 – some of them based in Ubud, Bali, and running a number of circles simultaneously, like a full-time job. They sent papers through about the protocol and whom to report back to – a clear yet covert hierarchy.
Halford was told not to Google anything about gifting circles because the many warnings on the internet just came from embittered people with "negative energy" and men putting women's work down. Her misgivings increased when the pressure came on to bring in others.
"Recruiting" is not one of the "magic words" they were using. "There was a lot of fake terminology, quite cultish. We had to rehearse our spiel of how to invite others on those weekly calls – 'We gotta birth this, come on!' It started to feel completely wrong."
The weekly "wisdom calls" with the "sisters" became more and more onerous for the busy health practitioner: hours of reflecting on personal questions such as, "What does abundance mean for you?", working on her "energy of attraction" and removing "blocks" around her resistance to invite peers. Two vulnerable women were pulled in by others: a single mother with health problems and a young foreign girl who was pregnant. For these women it would be nothing but a $US5000 mistake.
"They will never make it to the top position," says Halford. "It's sad, really." In August, she finally pulled out. There was chaos. Another Circle group in Golden Bay had just collapsed after some members got cold feet. But questions about the legality of this "new paradigm" were firmly dismissed by the Lotus ('We follow the law of our own heart!').
"They were acting as if there was a persecution of witches going on", says Halford. The last she heard from the inside was a warning on the group feed from a "senior sister" in Bali who got wind of this article: "We do NOT defend circle… don't even admit you are in it and don't want to talk… NOTHING."
Now newly married and just back from her honeymoon, Halford is less fazed by the money she lost than by her own gullibility: "I could have risked my medical licence if I had taken this further."
Despite those regrets, it wasn't just a hollow experience. "I had a lot of genuine heart-sharing and bonding with beautiful women who truly want to help each other. But there was also wilful ignorance and greed."
One year after leaving Circle, Kattia Wong still has strong feelings about her experience: "It lacks integrity and can turn some women into parasites." At her local café in Auckland, the 45-year-old leather fashion designer recalls how she was approached at Luminate, a summer music festival in the South Island. Like everyone who joins, Wong had to sign a gifting document and also agree verbally not to expect anything in return.
"They told me it's just a formality to keep it all in the legal domain," she says over a chai latte. "It's contradicting because their success stories on Facebook, their holidays in Bali and their new cars made us believe we can all make the same amount."
Wong came up with the money herself. Others in her group were "backed": an outsider or another Circle sister pays the full US$5000 and gets half of the return in the end (US$20,000). Like Halford, Wong was told not to do any research. When she finally did and came across a blog post by an international spiritual singer that had attracted hundreds of warning comments, it was a shock. Her conscience kicked in.
"If I walk away with US$40,000, there is a strong possibility further down the line that [other] women will lose out. I am connected with them all." Wong wanted out. But in order for her to extract her gift gracefully, someone new would have to come in and give that share to her. "I could not do this to another person, knowing what it is. I was torn."
Her whole circle collapsed, the other seven Seeds all lost their money. In the midst of her moral dilemma, she confronted her Lotus. Wong was told she had no right to ask for anything back since she had signed a gifting document. It was messy. After weeks of meetings, tears and emails, she finally went to the authorities and was even thinking of getting a criminal lawyer.
"I was so stressed I couldn't sleep", she says, weighing up every word because she doesn't want more conflict. "It is not about the money any more. It's about justice. They are twisting spirituality for personal gain.
"They have lied to me by saying it is legal and not a pyramid scheme. Many women would not join in the first place if they knew the truth."
According to the Commerce Commission, hallmarks of illegal pyramid schemes are simple: they require continued recruitment of new members who have to pay to join (see sidebar below). The Circle guidelines state that every Sapling needs to bring in two new women. A Wellington woman was expelled from her Circle group this year because she failed to do so. That makes the gifting document invalid. "You can't make a legal contract based on an illegal act – it won't protect anybody from criminal wrongdoing", says women's rights advocate Chanel Coradine from Christchurch. "If a substantial number of people have been affected, then a class action could be a potential course of action, although it's new to New Zealand."
"Bring it on!", says Renata* via Skype. "I am not worried. I know the essence of it is totally legal." Renata, in her early 40s, is a not-yet-birthed Lotus from the North Island. She has been in Circle for two years and believes in it passionately as a supportive network for women. "I come from a space of feeling. It's not about the money. It's about sharing our gifts and learning from each other." Being a Lotus is as much a personal priority for her – "You need to feel Circle and your sisters every day, like being in a relationship with your partner" – as it is a time commitment: putting up the list of questions for the week, making invitation calls and weaving the threads.
She calls it "holding space" and "being present", and she takes it seriously. "It's part of my deepening as a woman." When asked about the steep price tag for this "sacred work" Renata repeats the standard line of Circle defenders: "You would pay $2000 for a week-long yoga retreat or a professional training. This is so much better for me."
Despite the controversy, there are women who feel they are getting their money's worth even if they never see a tangible return. One sends a Facebook message from her overseas camping trip: "I happily hiked an hour up the mountain in order to find reception for our weekly calls – every one of us always feeling more uplifted in the end." Having money involved, she writes, adds some discipline to come together despite busy lives. "I felt spoilt."
Emily* echoes those words. "I did not have a lot of self-worth", she admits over coffee on a rainy day in Christchurch. The quiet woman in her early 30s was backed into Circle by another woman who later only asked for that amount back. "It was the most amazing feeling, someone believing so strongly in me."
Emily's US$35,000 windfall was spent on a relative's funeral and a desperately needed family holiday. Her husband had been laid off work. She is hoping to "birth" again to pay her student fees.
Half of the women in her group are single mums and struggling. "We really care for each other." They have all met in person, one even flying over from abroad.
The personal growth has been immense for the young mother. "I am calmer, I learned more empathy, I look at my old patterns. Circle has helped my relationship with my friends, my kids and my husband. We would probably be separated by now." She sounds guarded but earnest and less rehearsed than some of her peers. "It absolutely saved me."
When the conversation turns to the legal question marks, Emily's eyes well up for a second, then change into a fierce stare. She dabs at the open notebook in front of her with a pen. "You know what a real pyramid scheme is?" She sketches a triangle. "A pharmaceutical company, with a CEO at the top and all of us consumers at the bottom." Another angry dab. "This is one. Not what we do."
According to those who see themselves as the secret CEOs of the Circle emporium and regard their tax-free income as a coaching fee, they have helped many women not just fulfil material dreams but turn their lives around by starting a business, shooting a documentary or even moving on from prostitution.
Circle legend says the movement originated in Canada in the 1980s to help women escape domestic violence. Whether that is true or not, it's a fact that whoever initiated this cleverly marketed "flow of abundance" invested nothing but walked away with US$70,000 – and was long gone before anyone caught on to it being a questionable structure.
Julia* from Auckland, now in her early 30s, was one of the first to join Circle in New Zealand when she was in her 20s. She paid for her yoga teacher training from the money she made. "I loved it and I have no regrets", she says. "I learned how to stand up and speak, and a lot about women – including our dark sides."
Her issue is not with the system itself but with some of the people it attracts: "Half of them are the superior cult leader types and the other half those young ones who just want to make a living. Some see it as a business transaction, some as a rescue group." What Julia saw was the manipulation by one "domineering narcissist" and "complete con artist".
"A lot of us got dramatically affected by her actions and the co-dependency. She told a friend of mine that she had to let go of her money or she would not grow spiritually. The Law of Attraction works in mysterious ways, but not by cheating people out of money."
There was group pressure against those who cried too much or dominated the Skype calls. "When I got in, it was fun and exciting. By that stage, it was heavy. That's the side that doesn't get talked about – all the upset."
The breaking apart of friendships and communities is what drives Amber Bieg to speak up. In October, the American business consultant who also runs "Conscious Female Leadership" retreats held a presentation at a conference in Oakland, California.
Her speech about "Toxic Mimics in the New Economy" addressed the "gifting circles". "People are seeking alternatives to the existing banking system that is not fair", she explains over the phone from San Francisco, "but the Circle system is not fair and not inclusive either. Some people get screwed and some walk away like rock stars. It is not sustainable, it is unhealthy and it leads to collapse. The loss of trust is a huge repercussion when the illusion is shattered."
The 36-year-old has watched the fallout along the West Coast of the US and in Hawaii and reckons that about 300,000 women were involved – "many of them working in the marijuana-growing business and therefore already living outside the law and not trusting the system".
There have been serious ramifications. More than 20 Circle members across the United States have been convicted of fraud and tax evasion two of them with a 14-year jail sentence in Connecticut in 2013.
"Millions of dollars have been transferred from the hands of many to a few," Bieg says. She says some of the profiteers took off to Bali from where the scheme has spread further. Circle has recently popped up in more affordable versions in poorer countries such as Peru and Argentina and has a foothold in Sweden.
In New Zealand it might be close to its saturation point, at least on the female side, because a new group called Equilibrium was started only a few months ago in Golden Bay. It is aimed at men as well, contradicting the original Circle philosophy – and as another novelty, the four people who started this round will give US$5000 to charity once they "birth" because they didn't have to invest any money themselves."
Amber Bieg doesn't buy the charitable aspect. "Philanthropy is fantastic, but this is not what it is." She has been threatened for voicing her views. A prominent author attacked her by sending out an email to 500 people in her community. Another outspoken activist, Nala Walla, has skilfully dismantled the Circle claim of being the same as an indigenous gifting culture, proving it to be the opposite – an uber-capitalist patriarchy. As a result, Walla, a nutritional therapist in Port Townsend, Washington, was ostracised by her former friends while her mother was dying. She wrote about the fake masks of ice-cold pity on her Ecosomatica blog, titled "What blacklist?"
Bieg and Walla are part of an international network called "Healing the Gifting Circles". It offers templates for legal letters and aims for reconciliation by reparations by the lotuses or "desserts" who walked away with windfalls.
"Some women are secretly and quietly paying back the money, but many can't," says Bieg. A safe transition is what the women need who try to extract themselves from the Scheme. "Many feel very lost coming out of it and deeply betrayed. We are not different from them. I could have got caught up in it myself."
A similar support group for Australasia, Muddy Lotus, has started in New Zealand. Fran Halford is part of it. "Something beautiful has been mixed up with shit," is her summary of experience inside Circle. "You are given poison to drink, but it has your favourite flavour."
Now Fran wants to see women sitting together in a circle even more – a real one, on the grass of her farm, under the full moon. What would they need to bring as a contribution for such gatherings? "Just chocolate."
* Name withheld.
Circle Invitation Training
★ You are asked to make Circle a priority in your life through daily commitment and weekly activity.
★Tell your own story (…). Share with her your joy and gratitude for Circle and what an honour it was to be invited. Let her know how special she is and how you felt guided to invite her. (…) You may also want to share how you see Circle possibly fulfilling her dreams.
★ Do not be afraid of judgment. Remember, you are "giving" her a gift, and whether she is ready to receive it is her decision and not a reflection of you.
★ Afterwards, take some time to reflect on how it felt to invite. Did it reveal any fears/blocks that you may need to work on?
★ We do not talk about the Circles in public places where we can be overheard.
★ We only speak of Circle socially as a women's empowerment group, with no reference to gifting.
★ It is important to keep Circle documents in a private place. Sometimes it is necessary to explain the difference between "privacy" and "secrecy". We have nothing to hide.
★ Discernment is very important (…). Typically, we do not invite women in the legal professions (…).
★ Invitations are done either by telephone or in person. Emails are impersonal and not always private. Therefore, we do not invite through emails.
★ If a woman is right for Circle and says she does not have the gift, share with her that we have a document which offers many creative ideas, including Backing and Sponsorship. Share stories of how women have magically manifested their gifts after saying YES to Circle.
★ Have fun! Make it a joyful journey!
From a seven-page internal Circle document (Invitation Training, Bali, 2014).
Pyramid schemes are scams and illegal in New Zealand under the Fair Trading Act. "Gifting Circles" or "Women Empowering Women" use the classic eight-ball model.
Each structure contains a total of 15 members on four tiers who have to recruit two others. Once all the eight "Seeds" on the entry level have paid their US$5000 to the woman at the top called the "Lotus", she then leaves the circle with US$40,000. The group splits into two and the two women below known as "Blossoms" each become "Lotus" in the new groups, and so on. In other countries such as the US they use the symbol of a dinner party instead of the flower: The one at the top is "Dessert", the new entries are "Appetisers".
Mathematically, an investment pyramid is built on exponential growth and will therefore naturally collapse within a few years, even if women who have made their money come back in at the bottom. Only about 12 per cent of the members – the ones who joined the game early enough – make a profit. The rest never see a return.
There have been several convictions in New Zealand for spreading pyramid schemes such as "Alpha Club" (in 2003). Concerns should be directed to the police and the Commerce Commission. New Zealanders are advised by them not to join. Anyone operating or promoting a pyramid scheme risks prosecution. The maximum penalty is $600,000.
- Sunday Star Times