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The scheme seemed to have begun in Bristol, and had come across the Severn Bridge and taken hold in Caldicot.

It began sweeping across south east Wales, with reports of groups in Newport, Monmouth, Caerphilly and Cardiff.

At meetings in towns and villages, people were reportedly handing over thousands of pounds in the hope of winning much more in return. But the worry was that the Give and Take Scheme would create far more losers than winners.

Everyone who joins the Give and Take scheme pays in £3,000, and agrees to recruit two other people to join.

When enough people are signed up, the person at the top of the chart answers simple questions during a quiz night.

If they answer correctly the payout is £23,000. The remainder of the money goes to spot prizes, administering the payout nights and a donation to charity.

Those who join the scheme are told not to advertise it. Our undercover reporters arranged to meet a woman who'd had one payout and was willing to spread the message.

As she's one of numerous participants we decided to conceal her identity. She showed our team a chart of how the scheme works.

She told us, "It's like a social thing because obviously you're meeting other people on the chart.

"I've got everybody's numbers from all of these charts and you just keep in touch and you arrange as many meetings as you can to keep together, bring people, and get them to listen to it basically."

Dr Edmund Cannon is an expert in Economics at the University of Bristol. He can prove that before too long any pyramid scheme will run out of people willing to put their cash on the line.

He says, "It's not sustainable because you will always reach a point where there aren't enough people willing to pay into the system for those people already in the system to get some money back out again.

"By the time you get to the 20th level of the pyramid you're going to have a million people involved, and by the time you get to the 26th level of the pyramid the total number of people involved is 67 million.

"That's larger than the population of the United Kingdom, including children and infants. It's just not going to happen."

Even the organisers admit that the pool of people interested in joining the scheme will dry up eventually.

Our undercover team asked whether people, could lose out. They were told, "I'll be honest with you, I think eventually, yeah. I would say probably people would lose out on it.

"It's still quite new to the Newport and Cardiff area so my advice would be really if you want to do it, go on as soon as you can because people in your area probably haven't heard of it yet and there would be a lot of people interested.

"So you'll get your payouts and get it moving quite quickly then obviously it would work its way down to Bridgend and Swansea."

But in some areas the scheme's already run out of recruits. David Parfitt from Ynysddu, near Blackwood, invested money he'd received after his wife Marlene passed away early last year.

He said, "My wife died in January, I had a bit of insurance money left over. I thought if I put the £3,000 in, it would see me right for a couple of years if it came up.

"In my family, there's £21,000 invested, that's with my daughter, my son in law, my granddaughter, my grandson, my sister in law and myself.

"And it doesn't seem that anybody's going to get that back now."

David expected a payout before last Christmas, but the festive season passed without him receiving anything. It seems the organisers were blaming bad publicity from when X-Ray had highlighted the risk.

He told us, "They were saying it was legal, all the time they were saying it was legal. When it came up on the telly it was illegal, I thought we're going to lose £3,000."

Earlier this year the Office of Fair Trading arrested three people in Bristol after an investigation into pyramid schemes, also known as chain gift schemes.

Both the Consumer Protection Regulations and the Gambling Act say it's illegal to invite someone to take part or to knowingly participate in the promotion, administration or management of one. People involved risk a hefty fine and even a prison sentence.

But people involved in the scheme seem to believe it's legal.

Our undercover team was told "What makes it legal is, it's a gambling act but it's actually done in a residential setting, so I couldn't hold a meeting to discuss it in a public setting.

"It has to be within a residential setting which is why we hold meetings at my house and other people's houses on the chart."

And those who get involved are told that the quiz questions they have to answer before getting a payout means it's not a pyramid scheme. But the quiz element doesn't seem to have much risk attached.

We were told, "When you get to this position on your payout night you've got to answer four questions. Now the four questions are very simple, one person got them wrong all the time that I've been on it and I've been on it since last July.

"My one question was what part of Pinocchio's body grows when he lies, so it's very simple but you get to go up with somebody as well. You would never get kicked out of it, not at all."

Professor Margaret Griffiths is an expert in consumer law at the University of Glamorgan.

We asked her to look at the paperwork that the organisers use to promote the scheme, to see whether she thinks the quiz element makes the scheme legal.

She told X-Ray reporter Rachel Treadaway-Williams, "It's been dressed up a bit with raffles and prizes etcetera, but the main thrust of what it is about, is about recruiting other people and persuading them to part with their money into the scheme, and it's a pyramid scheme and it's illegal."

X-Ray asked what exactly is wrong with the scheme. Professor Margaret explained, "What they are essentially doing is deceiving people into parting with money on the belief they will get a big payout, which simply isn't going to happen."

There's another really disturbing element about these schemes.

Last year we told you that charities were seeking to distance themselves from Give and Take after organisers used charitable donations to lend an air of credibility to the pyramid. And they're still at it.

Our undercover team were shown a letter of thanks addressed to the group from the NSPCC.

We asked why the donations were made, and were told, "That's all part of the same thing to make it legal, the charity, the games and the answering of the questions."

When we contacted the NSPCC they told us that they're disappointed that their letter is being used to add credibility to Give and Take's activities, and they're trying to make sure it isn't used again.

The Bristol based committee behind the Give and Take scheme has always claimed they're backed by lawyers.

The organisers weren't available to talk to us, but their solicitor Patrick Selley spoke to our colleagues on ³ÉÈË¿ìÊÖ West's Inside Out programme.

He said: "I understand it's made quite clear at the time people join that they may win or they may lose, and that is an essential requirement and the committee are very keen to ensure that their activities are conducted within the confines of the Gambling Act.

"There are aspects that could make this a chain gift scheme, but there are essential differences, it's almost as if you're trying to say that they found some loophole."

Presenter Josie D'arby replied, "No, it's almost as if they're trying to say they've found a loophole."

So as the organisers of the scheme deny that it's illegal, people like David and his family are left counting the cost.

He said, "They're all distraught over it, can't lose that sort of money. It hurts quite a bit, it does. You think, it was money that was left from the insurance.

"It wasn't a great deal, of money, but if I could invest £3,000 and get £23,000 back, it would see me right for a couple of years. Now I've lost even the £3,000. So I feel quite mad about it."

X-Ray has heard rumours that the scheme's organisers are showing potential investors a letter from the ³ÉÈË¿ìÊÖ apologising for previous stories about this scheme, and agreeing that it is legal.

We've also heard about a similar letter from Newport City council. We'd like to make it clear that there is no such letter because the scheme is illegal.

If you've been affected or involved in Give and Take or any pyramid scheme, we'd love to hear from you.