The $34,000 Pyramid

There's a big difference between a pyramid scheme and a house of cards
City Pages

Gloria O'Rourke doesn't own a computer, but she's heard about the flood of get-rich-quick emails that fill inboxes. They come, day and night, by the dozens, hundreds, and thousands, from Lagos, Moscow, Amsterdam. They ask for pittances and they promise fortunes. No one but a fool would believe a word of it.

In the 1960s, Gloria was an avid participant in chain letters. Send this note to 10 of your friends and it will bring you good luck, they demanded, often threatening ruin and misfortune if you failed to respond. Gloria never broke the chain. She didn't want to be rude. She wanted to keep her good luck, which served her well in the summer of 1978.

"The only thing that really gets my Irish up is when they call it a 'scam,'" says Gloria, her hammy fists flashing in front of her face. "We know better. We did it."

On a Sunday afternoon in 1978, Gloria's shop-owner neighbor Ruth visited the O'Rourke home in the so-called Catholic ghetto of south Minneapolis. Incarnation Church and school on 38th Street and Pleasant Avenue was one of a half-dozen parishes that made up the area, which was stuffed with baby-boomed working-class families. Gloria and her husband Bob were raising 10 children on Bob's traveling-salesman salary, augmented by Gloria's occasional part-time work as a door-to-door market researcher.

That Sunday, Ruth excitedly explained the pyramid scheme to Gloria and her daughter. Ruth handed the O'Rourke girls a sheet of mimeographed paper. On the sheet was a list of 30 or so names and addresses. The names were in the form of a pyramid. To join, you needed simply to put your name at the bottom of the pyramid and mail a 50-dollar bill in a greeting card to the person at the top. Next you'd convince your friends, family, and strangers to do the same, and wait for your payday.

Ruth heard about it from her relatives in Pennsylvania. She was the second or third person in Minnesota to sign on, and she wanted Gloria to be number four. Gloria was reluctant that afternoon, but her daughter wasn't.

"She's the one who did it. She sent the card and put my name at the bottom," says Gloria. That's not her real name, by the way. She still smarts from the publicity that came with the whole "scam" of the late '70s, and the role "the media" played in bringing it down. The fact is, she didn't want to be interviewed for this article, and she certainly didn't want to have her picture taken. But her Boston-born husband Bob, who sat next to her at the kitchen table in their modest St. Louis Park apartment, agreed to it. (All of the names in this article have been changed to protect the writer from getting his ass kicked by Gloria.)

"The reason it worked is because of the women," says Bob. "They made it work. They organized the parties, they made all the phone calls, and they were honest. They would call you up and ask if you were having trouble getting people to join, and if you were, they'd help. They'd talk you through it. They kept it going. And if you wanted out, they'd give you your money back."

"These two are like that," says Bob and Gloria's daughter, Mary, joining the discussion at the kitchen table after stopping by to deliver some groceries to her parents. They're retired now, but keep busy with volunteer and charity work. "They love people. They're good people. They want everybody to be in on it, to have a good time. They've always been like that."

After the initial sign-up, the work began. Gloria made calls to her church posse. All down Pleasant and Pillsbury people were joining—or snubbing—the pyramid. She and Bob hosted in-home explainer parties to, as Gloria says, "entice" people to join. They traveled to other neighborhoods in Minneapolis—Gloria remembers visits to Kenwood, Edina, Southeast, and the North Side—and even trekked up to the North Shore. Then, three weeks after she signed on, the money started coming in.

At first, it was one envelope. One birthday card. Gloria opened it and found a crisp $50 bill. The next day, more. The day after that, more. This went on for months. Some days it was $50; others, $500. At some point, the mailman stopped delivering mail to the O'Rourkes' mailbox, and started waiting for a human being to hand it off to for safekeeping. When he wouldn't join the pyramid because of fear of reprisal from his employer, the O'Rourkes signed him up.

"It was so exciting," says Gloria, her voice revealing a thick New York accent that hasn't faded a bit after decades of living in her adopted hometown. "We had so much fun. I just remember going to the mailbox and laughing. And we met so many good people. I remember the people more than...I don't even remember how much money came in."

"Thirty-four thousand," says Bob.

"No! That can't be," says Gloria.

"Thirty-four thousand," repeats Bob, nodding knowingly.

There are no bank records or cancelled checks to be dug up, because, "we blew it," says Bob. "All of it. Being a traveling salesman, I knew you don't try to hang on to something like that. I bought a new car. Paid cash. The salesman looked at me and said, 'I've never had anyone pay cash for a car before.' We might have paid off the mortgage on the house, I can't remember. We took the whole family to visit our relatives in New York. Fourteen of us."

It was during that trip to New York that Gloria got the news that the jig was up. "We're done," said one of her co-conspirators by phone. Four years earlier, then-Senator Walter Mondale had proposed a federal bill to make pyramids illegal. Mondale described the legislation as "one of the most important consumer protection measures currently before the Senate," and described pyramids as an "outrageous, indefensible, cruel, and widespread practice in America today." The SEC, Mondale said, estimated that pyramid schemes took in approximately $300 million a year from Americans. That number, he added, was "a very conservative estimate."

The bill died, but in a letter to Mondale backing the need for federal legislation, Warren Spannaus, then attorney general of Minnesota, described pyramids as the "Number one consumer fraud problem which I have faced in my nearly four years as attorney general of the state of Minnesota." Six months after Gloria signed on, Spannaus started arresting people who were holding pyramid parties. Minnesota law now makes illegal any "plan or operation in which a participant gives valuable consideration for the opportunity to receive compensation based primarily from introducing one or more persons into the plan or operation."

"We thought we were fine because we were just exchanging gifts through the mail," says Gloria. "But they told us that because there was no product we were selling, it was illegal. They said all we had to do was sell a button or something." She blames the media for misrepresenting her and her friends' work and fun as something untoward. She hasn't joined a pyramid since.

But not everyone remembers Gloria's pyramid so fondly. One 19-year-old Catholic kid, a former altar boy from the neighborhood, had mailed off his $50 when the pyramid was just starting to reach impressive heights. His older brother, a blossoming punk rocker, did the same. They watched and waited, tracking their names from the bottom to the top. They even hosted a pyramid party in their parents' home, which drew strangers from all parts of the city. In fact, they were just one name—one winner—away from receiving money when the attorney general toppled the pyramid for good.

Twenty-five years later, I'm still checking the mail, looking for greeting cards with $50 inside, and cursing the name Warren Spannaus.

Jim Walsh can be reached at 612.372.3775 or [email protected]

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