Pyramid Schemes

The illiterate farmer has hardly slept for weeks, and when he does he has nightmares. His breathing is irregular; his brow heavy. The source of his anxiety? A tower of cardboard boxes in the next room. Filled with ants. After more than four decades of backbreaking work tilling the soil, Li Fanghai, 62, and his wife had managed to save $11,000, which they invested in ant farming. These ants were far more than uninvited picnic guests, the couple were told.

California Atty. Gen. Jerry Brown sued an Internet-based travel business Monday, accusing it of operating a pyramid scheme and seeking more than $25 million in fines and restitution. The company, YourTravelBiz.com Inc. of Wood River, Ill., recruited tens of thousands of members with promises they'd earn big returns by setting up personal travel agency websites, the complaint said.

Colombian government officials declared a state of emergency Monday, boosting their powers of arrest and money seizure, to help deal with multimillion-dollar investment scams that have targeted mostly poor investors. Panic spread last week among investors across Colombia after one suspect financial agency halted payments. Disturbances broke out in 12 states, police said, and investors stormed offices in the southwestern cities of Pasto and Popayan, threatening to lynch the managers.

What do mothballs and toilet bowl deodorant bars have to do with drastically improving gas mileage? Nothing, say prosecutors who are going after a company that claims a small ball made with the chemicals in those products is a "gas pill" that can boost mileage 25% or more. Texas Atty. Gen. Greg Abbott sued BioPerformance Inc. on Wednesday, a day after a San Antonio judge signed a temporary restraining order forcing the Dallas company to cease allegedly deceptive acts and froze its assets.

The Securities and Exchange Commission is seeking to shut down a network of 25,000 websites, accusing operators of running a $15-million pyramid scheme that promises to shower participants with easy cash. Prosperity Automated System, which bills itself as a marketing network, "is destined to collapse and leave the vast majority of investors with substantial losses," the SEC said Wednesday. The complaint targets the network and its creator, William M. Osterhout of Citrus Heights, Calif.

Here come the mini-Madoffs. The Better Business Bureau warned Wednesday about a proliferation of what appear to be Ponzi schemes on YouTube. The agency said nearly 23,000 of these videos -- usually promoting "cash gifting" or "gifting club" programs -- had been identified and they'd gotten nearly 60 million views. "They make it seem like it's legal and an easy way to make money, but it's nothing more than a pyramid scheme," Better Business Bureau spokeswoman Alison Southwick said.

Colombia's financial superintendent, Cesar Prado, resigned as the government scrambled to help thousands of people who lost hundreds of millions of dollars in pyramid schemes that have sparked riots and looting. At least one person has been killed in violence triggered by the collapse of illegal companies like DRFE (for "Quick, Easy, Effective Cash") that lured investors with promises of returns of up to 150%. One man reportedly killed himself when he lost his money after selling his home to invest in a scheme that promised to double his investment.

Former U.S. Rep. Edward Mezvinsky, a Democrat who became prominent during the Nixon impeachment proceedings, was sentenced to more than 6 1/2 years in prison for bilking people out of $10 million. Mezvinsky, 65, pleaded guilty to 31 fraud counts in September. Tearfully apologizing in a Philadelphia courtroom, he admitted that the victims, who included his mother-in-law, had been misled by a series of schemes he began orchestrating in the 1980s.

More than 300 Afghan women have complained to a state agency about a "Women Helping Women" pyramid scheme that scammed them of thousands of dollars, officials said. Department of Corporations officials have been told participants contributed $625 to $5,000 to the women-only scheme that targeted the Afghan community.