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Pyramid Schemes

Pyramid schemes are a type of financial fraud and are illegal in Florida. Usually prosecuted by the Florida Attorney General’s Office, those who are charged and convicted of this offense face up to a year in prison, so if you are being investigated for participation in a pyramid scheme, it is critical to contact an experienced white collar crime attorney who can explain your legal options.

Pyramid Schemes Defined

A pyramid scheme is defined as any sales or marketing operation where, in exchange for making an investment of over $100, a person is given the opportunity to receive compensation, not based on the volume or quantity of goods or services sold, but on the number of people he or she convinces to participate in the operation. In Florida, anyone who participates in these types of enterprises can be charged with fraud, including anyone who:

  • Becomes a member of this type of group;
  • Is affiliated with a pyramid scheme; or
  • Solicits others for membership or affiliation in a pyramid scheme organization.

These individuals can be charged with a first degree misdemeanor and if convicted, can face up to one year in prison and a $1,000 fine.

Many people who are charged with involvement in these types of investments are unaware that they are doing anything illegal. For this reason, it’s a good idea to keep an eye out for signs that an organization may involve a pyramid scheme, which could include:

  • Offers to join a program or team where members are required to recruit others in order to make money;
  • Offers of goods or services that have minimal value and only exist to promote a larger scheme;
  • The required payment of a large fee up front; and
  • An organization where no goods or services are actually offered for sale.

Pyramid schemes are increasingly organized and managed on the internet, which can make them even more difficult to detect.

Federal Prosecution

Although pyramid schemes are primarily prosecuted by the state’s Attorney General’s Office, federal agencies can also investigate and bring charges against those allegedly involved in these types of organizations. Some of the federal agencies that pursue legal action against those suspected of participating in pyramid schemes include:

  • The Federal Trade Commission;
  • The Securities and Exchange Commission;
  • The Financial Fraud Task Force, which is a coalition of federal agencies and committees who investigate serious financial fraud;
  • The Internal Revenue Service, but only if the scheme involved defrauding the government; and
  • The U.S. Attorney General.

Federal charges can have serious consequences, including a sentence of up to 25 years in prison and hefty fines. Because multi-level marketing companies share a number of characteristics with pyramid schemes, many innocent business owners are falsely accused of participating in pyramid schemes every year.

Contact Jeffrey S. Weiner, P.A. to Speak with an Experienced White Collar Crime Attorney

If you live or work in south Florida and are being investigated for participating in a pyramid scheme, please contact us at the office of Jeffrey S. Weiner, P.A. and a member of our legal team will help you schedule a free consultation with a knowledgeable and experienced white collar crime lawyer.

Resource:

flsenate.gov/Laws/Statutes/2011/849.091

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