"Women Empowering Women" founder Susan McCarty, who is also the owner of Salt Lake's well-rooted modeling firm McCarty Agency, is one of the first targets of the Division of Consumer Protection's crackdown of so-called "gifting clubs."

The division in early July issued a warning against the clubs, which are considered pyramid schemes and are illegal in Utah.

"As a division, we will do all that we can to see that they stop," said Francine Giani, consumer-protection director, after her office had received dozens of calls questioning the legality of the clubs.

"We will be aggressive in taking action against them."

A July investigation found McCarty's organization, "Women Empowering Women," was in violation of the Utah Consumer Sales Practice Act, and McCarty was fined $1,000.

McCarty, however, denies the club violates any laws and has filed a petition in 3rd District Court requesting a judge intervene. She did not return a call from the Deseret News this morning.

According to court documents, McCarty's organization was made up of groups of about 15 women, each of whom paid $5,000 to join. Each group had four levels of participants: eight "giver" positions, four "supporter" positions, two "apprentice" positions and one "receiver." It was expected, although not required, that the receiver would "gift" at least two women in need of "financial empowerment."

Participants of the club have described it as a charitable organization whose purpose is to help women, rather than an investment opportunity, as most pyramid schemes are billed.

But, according to state investigator Kevin Olsen's report, Women Empowering Women has not registered with the Division of Consumer Protection as a charitable organization.

"The fact that the 'receiver' becomes socially empowered with money or other support that she may receive from her circle or that the money was otherwise put to honorable uses is not relevant to the issue of whether the organization is a pyramid scheme," Olsen wrote.

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Each woman Olsen spoke to who participated in McCarty's organization defined their motives as "truly altruistic and not fraudulent," the petition states. One member said her donations came in the form of professional counseling, scholarship money and financial help for necessary items, such as food. Another said she was able to pay for "long overdue dental and medical care, to refurbish her home and to buy an economy car." Regardless of how participants use their newly acquired money, the club is still illegal, the state contends.

"However benevolent this expectation may be, it does not change the nature of the transaction," Olsen wrote. "Clearly, the gifting circles that the respondent promoted, organized or administered were pyramid schemes as defined by statute."

Judge Leslie Lewis will review information from both sides before issuing her ruling.


E-MAIL: awelling@desnews.com

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