Brixdale Inc. touts pyramid scheme
By PAULA PARISOT
5/25/2005

A finance company based in New York promises real estate loan borrowers that its program can help them pay off their mortgages within months. But the program details paint a picture of a pyramid scheme.

Uniondale, N.Y.-based Brixdale Inc. announced the new program called the "Inverse Mortgage" is designed to pay off mortgage loans in a matter of months, without any out of pocket costs.

According to the company's Web site, the program works by using up front interest saved on mortgage loans by requiring that members begin the program by paying four monthly payments every 23 days, then after those four payments are made, payments revert back to a regular monthly schedule.

Brixdale said it handles the mortgage payments for its members through the use of the Federal Reserve Bank's ACH system and that they are regulated by the Federal Reserve Board.

Brixdale sales consultant Sherm Mason said the program works on a referral method called a "two-up," where a qualified member brings two additional members into the system and then starts benefiting when a third member is introduced. Once the three qualified members are in place, Mason said, it is possible that a $250,000 mortgage could be paid off in as little as 12 months. If the member is a renter, then the money goes into a cash reserve account, he added.

"The first two qualified members roll up to the person who brought you in," Mason explained. "So the third (and subsequent members) will be helping make your payments."

Mason said the company earns its money by charging the member the equivalent to one monthly payment at the end of those 12 months.

For a "nominal" fee, Brixdale said it would supply its members with a lead list to help generate qualified members.

"Anyone who is over 18 and a U.S. citizen can do this," Mason said. "There is no license or certification required." Those who do not hold a mortgage can buy-in to the program, the company said.

Mason said he has been in the program for two months and has generated $11,000 in income from the program.

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