The state of Iowa has filed a consumer fraud lawsuit against a West Des Moines woman and her daughter-in-law in Indiana, alleging the two masterminded a pyramid scheme that defrauded hundreds if not thousands. The scheme was marketed to women under several names, and required an initial “gift” of five-thousand dollars. Attorney General Tom Miller says it’s unusual for the state to sue individuals involved in a pyramid scheme, but he says it appears the two women started the ruse.Miller says the scheme appears to still be operating in northern Iowa. Michael Loughran of the Internal Revenue Service says this past spring the I-R-S mailed notices to known pyramid participants, warning them to pay takes on any of the money they received through their participation in the scam.He says promoters say the money is gifts, but the money is taxable.The defendants, Ann Kelley of Brownsburg, Indiana, and her mother-in-law Judy Kelley of West Des Moines face fines of up to 40-thousand dollars for each violation, but state officials say they don’t know how many people participated in the scam. Miller says some have already gone to small claims court to get their money back.Miller says more defendants may be named as the investigation continues.