Hilo woman refuses to pay pyramid fine

By Timothy Hurley
Advertiser Staff Writer

A Hilo woman who was fined $10,000 for her role in an illegal women's gifting circle on the Big Island said she would not pay the penalty because she was unfairly targeted by the state Department of Commerce and Consumer Affairs.

Marlene Vintero said yesterday she was only one of many participants and not an organizer in what the state called a pyramid scheme.

Vintero, who was named Entrepreneur of the Year by the Big Island's Filipino Chamber of Commerce, said she had been targeted by her accusers because she is relatively well off. Her husband is a house builder and together they own two houses.

Vintero said the accusations and shame had ruined her, forcing her to retreat from public life. But now she plans to "fight it all the way" and is refusing to pay the $10,000 fine.

The department had sought a $90,000 fine, but a hearings officer in October recommended the lesser amount, and state securities commissioner Ryan Ushijima agreed.

According to the hearings officer, Sheryl Nagata, Vintero committed securities fraud by failing to register four gifting circles. But Nagata also said Vintero was not the primary organizer and did not profit from the venture.

Vintero, a registered nurse at Hilo Medical Center and owner of M&M Imports in Hilo, said she was invited by a friend to a May 2000 "Women Empowering Women" meeting at a Hilo church and was impressed with the gathering, which included prayers and women telling stories about being helped and helping others.

"To me, it was inspirational to hear those kind of stories," she said. "It really felt good to help people."

She was invited to offer a "gift" of $5,000 with the eventual chance of receiving $40,000, with no guarantees. The next day she paid her money.

"I didn't expect anything in return," she said. "If it was my turn and I received the gift, that was great. But I didn't expect it."

Regulators described it as an illegal pyramid investment scheme. New club members give cash "gifts" to the highest-ranking club members. If they recruit additional members to join, the new members are promised that they, too, will rise to the top and receive the big payoff from newer club members.

Vintero said she had no idea it was illegal.

"Being a registered nurse and a business owner, I would not have gotten into something if I had known it was against the law," she said.

After Vintero received her $40,000, friends and acquaintances began asking if they could join, and it got out of hand, she said.

"Everyone wanted a piece of the pie," she said. Vintero said she gave away all her "gift" money to others so they could join.

When news accounts reported that the gifting circles were illegal, she discontinued her involvement, she said.

But some in her group who had not yet received their $40,000 went to state regulators to file complaints against Vintero. The state built its case on the statements of 20 individuals.

Patricia Moy, senior enforcement attorney for the Department of Commerce and Consumer Affairs' Securities and Enforcement Branch, said Vintero failed to meet a deadline to appeal the fine. If she doesn't pay, the department will seek a court judgment against her, Moy said.

As to whether Vintero was targeted unfairly, Moy said one of the difficulties in prosecuting a pyramid scheme is that everyone involved is breaking the law. She said there's no doubt others were doing the same thing.

"But our case was based on 20 people complaining about what she did. I think she got off light," Moy said. "She's lucky she's not living in another state, where they're criminally prosecuting people."

Contact Timothy Hurley at thurley@honoluluadvertiser.com or (808) 244-4880.