Rachel Royce

Girls just want to have funds

The government would like to outlaw pyramid selling. Why? Rachel Royce has joined Hearts, the girls-only investment scheme, and finds it good, clean – and profitable – fun

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The government would like to outlaw pyramid selling. Why? Rachel Royce has joined Hearts, the girls-only investment scheme, and finds it good, clean – and profitable – fun

I have a confession to make – but please don't tell my boyfriend. I've made a somewhat high-risk investment. It will cost me £375, but for that I can expect a return of £6,000 – maybe. It's a gamble – I know it's a gamble – but I thought that amount of money could be laundered from the housekeeping, lost somewhere among the cornflakes and the chardonnay and bailiff demands for forgotten Blockbuster videos.

The scheme I've invested in is known as Hearts, and it's for women only. It calls itself a 'gifting scheme that benefits all women'. Men aren't allowed in because they'd ruin it with their incessant cynicism and greed. They aren't even supposed to know about it. That, in a way, is the point.

It works like this: you buy a 'heart' for £3,000 and then recruit some friends to do the same. If you are like me and pathetically poor, then you can opt to buy a smaller share – in my case, an eighth of a heart.

When a sufficient number of new people have been recruited, you're in line for a lovely pay-out. You throw a party. Your friends come to your house with stacks of cash. You serve up the champagne and say thank you very much as you count your winnings: eight times your money. That's not a bad return, now, is it?

Hearts is heartily disapproved of by boyfriends, partners, husbands, and by the government, which wants to ban it. Ministers say that it doesn't work and women are being conned. They say it's a form of pyramid selling where those at the top do very well and those at the bottom lose their entire investment. Tessa Jowell, taking a break from attacking the BBC, said a few weeks ago, 'I feel particularly concerned that many women have lost thousands of pounds of hard-earned savings, and many more may lose out. There is no doubting the misery these schemes can cause, and my advice to women contemplating joining is simple: "Don't do it."'

Hearts began in the United States and has gone under other names such as 'Women Empowering Women' and 'The Network'. It surfaced in this country about three years ago. Famously, there was a scheme on the Isle of Wight. At first people made a lot of money. The NatWest bank in Newport had so many £3,000 withdrawals that it was concerned its branches would run out of money. But then it all came to an abrupt halt. The pool of new investors dried up and hundreds of people lost out. That, say the women, is because men were involved, with their cynicism and greed. Plus, the Isle of Wight was too small for the scheme to spread.

When I heard that Tessa Jowell was against the scheme, I thought, hell, I'd better join up. And I kept bumping into friends who had done very well out of it. A decent pay-out, I thought, would clear the overdraft.

I was introduced to the scheme by a friend called Tori, who was signed up by her friend called Torli. Confusing, I know. But their names alone may give you some indication of the political and sociological composition of this Hearts business. It's an upper-middle-class thing. In my neck of the woods it's a horsey, upper-middle-class thing. The women sign up, wait and buy a nice new horse.

You get introduced to the scheme at convivial gatherings. A glass of wine by the river; a coffee morning in someone's nice house while the husband is away somewhere being cynical and greedy.

It wasn't really what you'd call a hard sell, over at Torli's house. But it was nevertheless seductive. I had a couple of glasses of wine on her lawn by the River Wylye and chatted with other Hearts investors. Two of them were friends from the stables where I keep my horse. Adrienne has been through Hearts three times and has made something like £30,000, she said. She's given £10,000 away to a friend who was hard up. Katie is on her second scheme and used her winnings to buy a new thoroughbred, which she plans to use for cross-country eventing.

Torli has also been through the scheme several times. She invested in a heart for a friend who'd recently been widowed. She didn't tell her; she just turned up at her house some weeks later with £6,000 cash. 'It's not just about helping yourself,' Torli told me. 'Lots of people are doing it to help friends who are hard up or to raise money for charity.'

Traditionally, pyramid schemes like these were aimed at people desperate for cash, but the current schemes are popular with the well-to-do. Lady Portia Agar, daughter of Lord Normanton, and her friend, Flora Harrap, the grandaughter of Lord Carbery, were among the first to join. Even Claudia Schiffer was spotted at a Hearts party in Eaton Square. Lady Elizabeth Anson, a cousin of the Queen, is reported to have made £48,000. 'It may sound like an avaricious scheme,' says Lady Elizabeth, 'but it's just not. One church I know has a new roof, and someone who urgently needed private medical care but couldn't afford it herself has now been able to pay for it. Quite apart from that, it's very social and people have a lot of fun doing it. Because of the high rate of re-investment, it's never a case of being too late.'

As I say, there are a lot of horsey people involved in Hearts. It's done the rounds several times over at Newmarket, with people making as much as £80,000. There's an obvious link. People who are used to betting on the horses don't mind having a flutter on their friends.

The government is planning to introduce hefty fines, and even up to six months in prison, for anyone indulging in this sort of pyramid-gambling practice. But new legislation isn't expected until 2005 as part of a new Gambling Act. At the moment it's not illegal in this country. You don't even have to pay tax on anything you receive. An Inland Revenue press officer explained to me that every person in the country could give you £3,000 each and you still wouldn't be taxed on it.

But elsewhere in the world there are already laws against what some people call 'pyramid-gifting'. In North America, it's against the law. Try it in Hawaii, and you could get 20 years in prison. But it's hard to prove what constitutes a pyramid scheme.

At first I was hesitant about joining. My friend Gilly had snorted with derision when I told her about it and said, 'Well, either you will get your fingers burnt or one of your friends will.'

But then I bumped into Kit and Wendy – two very sensible, very clubbable mothers – outside the school gates. Kit is a farmer's wife, chair of the local pre-school, and an active local organiser. 'Of course it's a gamble, Rachel,' she said. 'But as long as your friends know it's a gamble, why does it matter?' And then Wendy, who lives in army officers' married quarters in Warminster, told me that she was in two schemes. 'It's spread like wildfire through the army camp,' she said. 'I know a warrant officer's wife who is planning to do it every year to help with boarding-school fees.'

I couldn't resist any more. I didn't want to be left out, and I didn't want to be one of the suckers too far down the chain to have any hope of seeing the dosh. So I studied Torli's chart, which shows all the hearts with names, home and mobile phone numbers. There were quite a few names on the chart that I already knew: my Astanga Yoga teacher, for one. I felt that anyone who regularly meditates on the power of Om couldn't possibly break a sacred female bond of trust and friendship.

At this point I revealed to the drinks party that I was not terribly upper-middle at all by asking whether I might get sponsored to join. It means that I only double my money. Torli said she'd sponsor me. That was it. I was in.

Torli had told me that it would be good, but not essential, if I signed up two friends, and the more I signed up, t he quicker I would get my money. But one of the scary Internet articles had pointed out that each pyramid must increase by a factor of eight, so for everyone in my line to get their money, we would need 4,096 people. Another lurid article suggested that for 12 layers of a pyramid you would need eight billion people – more than the population of the planet. That's what the hard-nosed economists have been saying – but it's not what's happened in practice around here.

I may yet be able to dodge my obligation to part with £375 if the government goes ahead and keeps its promise to ban the scheme. I think the threat of a six-month prison sentence would be a good enough excuse to allow me to back down gracefully and still show my face in the village.

But I think that would be rather sad, because at the moment it's quite good fun. I'm enjoying the drinks parties, and I also think that I could get vicarious enjoyment out of seeing one of my friends receive a lot of money, even if it doesn't filter down to me.

Of course, I wonder about the morality of introducing my friends – and their friends – to something which might lose them money. The worry is that the original, upper-middle-class women will soon run out of rich friends and, under great pressure to bring in cash, start to recruit their cleaners. At this point, of course, investing becomes a much more dangerous proposition. But to disapprove of the scheme on these grounds is to suggest that women are incapable of understanding the risk and that, the poorer a woman is, the less choice she should have. Rich or poor, however, these women are responsible for their own actions. That in a way is what this little scam is all about: allowing women the responsibility to make financial decisions and giving them the rather glorious feeling of naughty financial independence.

And anyway, I've been wondering how a ban might work. Will the drinks parties instantly cease or will the women of the Wylye Valley pledge to flout the law like so many fox-hunters opposed to a fox-hunting ban? Will the police be obliged to arrive with flashing blue lights at a beautifully manicured lawn and drag the female miscreants away from their chilled sancerre?

The government may well be underestimating the strength of rural female solidarity. Perhaps it will become another cause cél'bre of countryside campaigners. As well as 'Hands off our hounds', perhaps on the next Alliance march there will be banners saying, 'Don't break our Hearts'. And even if a Bill gets through the Commons, will the ladies in the Lords stand for it? Or could it take the Parliament Acts for the government's will in this matter to prevail? Does Labour really need another issue where it finds itself at loggerheads with Britain's aristocracy?

In the meantime, I'm quite looking forward to upgrading my horse for something that doesn't try to buck me off every time I sit on it. And my boyfriend would never notice – as far as he's concerned, Hearts isn't the only pastime that's strictly for the girls.