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Pyramid players won't be prosecuted

The investigation was dropped after the lead detective resigned over a couple of DUII arrests

The two-year investigation of a Medford pyramid scheme known as the Original Dinner Party, will be scrapped.

The resignation of the case's lead detective, former Medford officer Ray Leach, prevents the Jackson County District Attorney's Office from filing charges, said District Attorney Mark Huddleston.

Without Leach to assist prosecutors and testify, the case could not be proved in court, Huddleston said. No other investigator was able to pick up the case.

There had been enough work done by Detective Leach that it would be extremely difficult to reproduce, Huddleston said.

Leach resigned from Medford Police Department in June last year after he was arrested for drunken driving, his second DUII in less than a year. Last month, he was convicted of the charge and sentenced to 10 days in jail and two years of probation. His driver's license also was suspended.

Prosecutors were preparing to take the Dinner Party case before a grand jury around the time of Leach's second arrest, said Deputy D.A. Matt Chancellor. Without Leach to testify, the case couldn't proceed, Chancellor said.

Although the line between suspect and victim in the case is blurred, several local women most likely would have been charged with selling unregistered securities, Huddleston said. Even if they lost money in the pyramid scheme, every participant was violating the law, he said.

The crime is a class B felony subject to a maximum 10-year prison sentence and a &

36;200,000 fine.

Local women may have been drawn into the scam by promises that it was legal because money is exchanged simply as a gift between friends and relatives, police said. In reality, the scheme is just like any investment pyramid ' destined to crumble, investigators said.

It's not a never-ending supply of people or money to put into it, Chancellor said.

Participants in the Dinner Party give a &

36;5,000 gift to join and work their way up the pyramid, divided into four levels named for dinner courses. Participants start at the appetizer level with their &

36;5,000 contribution and receive a &

36;40,000 birthday payment once they reach the dessert level.

The payments all were made in cash or cashier's checks often wrapped as a birthday present, police said. Notes and cards indicating that the money was a gift and that the giver expected nothing in return often accompanied the cash, according to police reports.

Some women told police that they received &

36;40,000 within a week of joining the Dinner Party. However, the odds of losing are much higher for those who join late in the game, Chancellor said.

Members join the party in groups of eight by giving a cash gift to one person at the top of a chart containing seven names. The top person then drops out of the party and the group splits into two.

When eight new donors join one of the groups, its top member receives eight cash gifts and the group splits again. In theory, the original donors eventually rise to the top of their party group and receive gifts.

But the party is doomed to fail when there are no longer enough women left to put money into the rapidly multiplying party groups.

There are not enough new people coming in to cover the people before them, Chancellor said.

Several local women who had been involved in the Dinner Party contacted detectives after newspaper articles about the scheme appeared.

It just didn't seem right, said Melanie Clement, who lives in Central Point. It's just logic.

Clement said she was involved in the Dinner Party for just one week after hearing about it from an acquaintance. She put in &

36;5,000, but the money was refunded when she left the pyramid, she said.

Gold Hill resident Susan Short said she attended a Dinner Party meeting but never signed up or paid any money.

I just didn't feel real comfortable about it, she said.

Police started investigating the case in May 2000 when an employee of Klamath First Federal bank notified police of the apparent scam after a client requested a &

36;5,000 cash advance to invest in a pyramid, according to police reports. Investigators said they believe a Seattle woman who works as a flight attendant for Alaska Airlines started the pyramid in Medford.

Although no charges were filed in the Dinner Party case, such investment scams are indeed illegal, Huddleston said.

I want people to know that they ought to stay as far away from one of these schemes as they can, he said.

Reach reporter Sarah Lemon at 776-4487, or e-mail