Marylanders who thought they had skirted the law by wagering in the wildly popular pyramid game in Washington now must find another place to play.
Authorities in the nation's capital are cracking down on hotels where the games are conducted.
After a request from U.S. Attorney Eric H. Holder Jr., officials of the District of Columbia Department of Consumer and Regulatory Affairs said they began pressuring hotels where players of the pyramid game met to avoid a Maryland statute that outlaws the scheme.
Mitch Berger, a lawyer with the department, said yesterday three hotels have been warned that the meetings violate a local consumer law that carries civil penalties.
"Two hotels have cooperated and we are working on a third at the moment," Mr. Berger said. He said agency investigators also have started inspecting hotel guest registration books for names xTC of people who booked rooms, suites and halls to conduct the pyramid meetings.
"We feel we have cut off the air of legitimacy," he said of the crackdown. "They can't meet elsewhere either, like a restaurant or store after hours, because we could invoke land-use restrictions and revoke the certificate of occupancy."
In the most popular version of the game, a player can collect a winning of $12,000 after an investment of $1,500 if enough other investors are brought into the game. Mathematically, each payoff requires investments from at least eight players.
And while early investors at the top of the pyramid may win, the number of people required to sustain the game soon increases and eventually the process is exhausted, leaving players on the bottom of the pyramid unable to collect. In Maryland, Virginia and 44 other states, organizing or recruiting players into a pyramid scheme is illegal, no matter where the payoff is made. It's punishable in Maryland by as much as a year in jail and a $10,000 fine.
Officials of the Internal Revenue Service said winners also should be concerned about income tax evasion if they fail to declare winnings. Tax evasion, a felony, carries a possible five-year prison term and $100,000 fine, plus interest and penalties.
The pyramid game flourished in the Baltimore area last month, particularly in Baltimore County where police are investigating reports that sworn officers traveled to Washington, sometimes by the busload, to attend promotion meetings or "cash out" on their investment.
E. Jay Miller, county police spokesman, said yesterday county detectives are supplying information gleaned from a larger criminal investigation to D.C. Metropolitan Police. "It appears to our people that this pyramid operation is broader than originally thought," Mr. Miller said.
Leaders of the Baltimore County Fire Department and Harford County Sheriff's Department have issued written warnings to members that the game is illegal in Maryland.
For the time being, the move by D.C. authorities appears to have worked, said an Anne Arundel County player who cashed out last month in a Washington hotel.
"I won my $12,000 and reinvested again," said the owner of a small business who agreed to talk
with The Sun on condition of anonymity. "But I have no choice [but] to look at it as a loss now. I'm very angry about this because this is an example of more government intrusion into our lives.
"When is my money mine? The government will get you when they want you but the people who played this are not criminals. They are average people who have jobs and who want to multiply their hard-earned wages.
"I also find this kind of remarkable," he said. "The city of Washington -- where the mayor is a convicted crack smoker, where there are all kinds of crooks masquerading as politicians, violence up to their eyeballs -- closes down this innocent game . . . Pretty remarkable."
A 55-year-old Columbia woman who claims she has cashed out three times in Washington said the district's crackdown is more public relations than substance. "Too many hotels are making too much money," she said. "This won't stop it because all you have to do is register under a seminar."
Another Howard County woman said last night she will attend three meetings next week in Washington. "It's unfortunate that our law enforcement system has given time to such an unnecessary exercise as going after good people," she said.