Although there are various types of pyramid schemes, the underlying characteristic is that an individual is promised to make a profit based on the number of people they recruit to join the program. They are referred to as pyramid schemes because of the structure of the organization. One person sits at the top, and the group grows wider as those below them recruit more and more people to join. Each of the recruits is required to pay a joining fee, which gets sent to the top person.
Sometimes organizations involved in pyramid schemes will claim to sell a product to disguise what is really happening in the company. Often, when a product is involved, the new recruits are expected to buy a large portion of the item (usually more than they would ever be able to sell). The monies paid to obtain the product are funneled to the top member, while those on the lower levels attempt to make back their money by selling the item to other individuals or recruits.
Pyramid schemes are a form of financial fraud, and both state and federal laws prohibit individuals from engaging in such practices.
State Laws Concerning Pyramid Schemes
Under Florida Statue 849.091, it is illegal for a person to become a member of or participate in an organization that requires recruits to pay dues or provide anything of value to another member to grow the program through a chain process. A violator of this law could be charged with a first-degree misdemeanor.
A person could also be charged with other offenses as a result of their participation in a pyramid scheme. For example, an individual could face money laundering charges. This offense occurs when someone attempts to disguise the origin of illegally obtained money by using it in various transactions. Depending on the amount of money involved, the individual could commit a third-, second-, or first-degree felony.
Federal Laws Concerning Pyramid Schemes
Pyramid scheme activities are also federal crimes, and individuals involved could be investigated by several agencies, including the FBI, the U.S. Postal Inspection Service, and the Securities and Exchange Commission. A person who recruits others for a pyramid organization could be charged with mail fraud, securities fraud, tax fraud, and/or money laundering. Each of these offenses has serious consequences, and if the individual is convicted, they could face time in federal prison and fines.
To Schedule a Free Consultation, Contact The Wiseman Law Firm
You may be an entrepreneur running a legitimate business and are being investigated for conducting transactions that might be mistaken for pyramid scheme-type activities. If you are facing charges, contact our attorney for effective legal counsel. Being found guilty could result in severe penalties that dramatically affect your future. Aside from incarceration and steep fines, a conviction will show up on your criminal record, which could impact your ability to get a job, find housing, or even enroll in school. Our attorney fights hard to minimize the potential consequences on your life. We can conduct a detailed review of your business dealings and interview witnesses to develop a compelling legal strategy and challenge accusations.
Get the aggressive defense you need by calling us at (407) 708-9127 or contacting us online.