Chain letter is back: target -- mail-order firms hit by recession

The recession has spawned a new scheme for an old scam -- chain letters aimed at small mail-order businesses. The letters, promising up to $625,000 in operating capital "within 20 to 30 days," are being sent to individuals and firms that use classified ads in national publications to sell their goods and services.

Charles Cheezum, assistant chief of the nation's postal inspectors, blames it on the economy. A cycle of chain letters will be set off by "inflation, unemployment, any financial problems," Mr. Cheezum says. "There's an up cycle now."

The latest chain letters also carry an unusual suggestion to lend them credibility: Give some of the profits to charity. Some even specify that donations of 15 to 20 percent of all profits over $2,000 be made to the Jerry and the Kids charity, a project of entertainer Jerry Lewis.

All the letters carry the disclaimer, "This is not a chain letter, but a perfectly legal moneymaking opportunity."

But, says Mr. Cheezum, they are still illegal, and those people who set up the scheme will be prosecuted. "But we have a difficult time trying to determine who initiated them," he says.

One chain boldly states, "This promotional letter was initiated by Nelson Robbards of Boston, Mass., for the purpose of accumulating funds for the firms engaged in the mail- order business."

Directories in Boston list no Nelson Robbards.

Otherwise, the letters are similar to those that have been circulated periodically since the depression, with this exception: They suggest where participants can find prospects. "Mail to 100 people who advertise in the classifieds . . . you will find thousands of such adds in the Midnight Globe, Examiner, National Bulletin, Closeup, The Enquirer, Star, Spotlight, Money's Worth, detective, sports magazines, and local newspapers."

"Most are rehashes of old letters and are sent out by people who are desperate and grasping at straws," Mr. Cheezum says.

Layoffs of workers at a large plant or factory create an atmosphere likely to set off a chain of letters, he continues. "They [the authors] are trying to survive."

The letters ask that $1 or $5 be sent to the name appearing at the top of a list, after which the top name is removed and a new name is added to the bottom of the list.

"As others follow through, your name will quickly move up the list," say the letters.

Simple arithmetic shows the hopelessness of participating, except at the first level. If no one breaks the chain, the letters pyramid from 100 persons to 10,000, to 1 million, to 10 million and, at the fifth level, to 10 billion -- more people than there are in the world.

Still, the lure is great for a small money- hungry mail-order businessman who receives a letter that reads: "So, every moment you wait, you are costing yourself money. Just follow the instructions, and in 20 to 60 days you will have all the capital you need."