News & Analysis as of

MLM / Direct Sales Criminal Law

Read MLM/Direct Sales Law updates, articles, and legal commentary from leading lawyers and law firms:

SEC Describes Recent Efforts to Combat Pyramid Schemes and Affinity Frauds

by McGuireWoods LLP on

Over the past two years, the Securities and Exchange Commission (SEC) has stepped up enforcement actions against pyramid schemes and related affinity frauds. Last week, in a speech at the University of Illinois at Chicago,...more

Bruner v. Texas , 463 S.W.2d 205 (1970)

Bruner v. TexasTexas

by Babener & Associates on

Bruner was accused of selling unregistered securities in violation of Texas state law. Bruner sold soap in an MLM structure to Owens who bought into the program based on representations that he would not have to perform any...more

Barron v. Nevada , 105 Nev. 767 (1989)

Barron v. NevadaNevada

by Babener & Associates on

The Nevada Supreme Court was asked if the charges of embezzlement and obtaining money under false pretenses were mutually exclusive in the case of the promoter of a pyramid scheme. ...more

Arizona v. Lycett , 133 Ariz. 185 (1982)

Arizona v. LycettArizona

by Babener & Associates on

Lycett was convicted of violating Arizona's anti-pyramid law and appealed on the grounds that the statute was unconstitutionally vague and that the legislature unconstitutionally enacted a statute that did not require...more

Alaska v. Bonham, 28 P.3d 303 (2001)

Alaska v. Bonham, 28 P.3d 303 (2001)Alaska

by Babener & Associates on

The Alaska Court of Appeals was asked to determine if a conviction of mail fraud in U.S. District Court bared the conviction of perjury and submitting misleading securities filings under state double jeopardy rules when both...more

People v. Frederick

When can a judge restrict an expert witness as to the type of testimony to be given, and what is the standard for an "investment...California

by Babener & Associates on

The court held that an expert need not be given an unlimited scope on which they may testify and that an investment contract is the investment of money in an enterprise with the expectation of return, but without the ability...more

Goren v. New Vision , 156 F.3d 721 (1998)

Goren v. New VisionIllinois

by Babener & Associates on

The Court of Appeals held that Goren's complaint was properly dismissed for failure to plead a claim under the RICO statutes or fraud. Goren bought nutritional supplements from New Vision, after listening to an audiotape from...more

US v. Orton, 73 F3d 331 (1996)

What is the proper method of accounting the amount of loss by victims of a Ponzi scheme?Alabama

by Babener & Associates on

The Court of Appeals held that the calculation of loss should be accomplished by adding up the amount of money lost by victims of the scheme, the "loss to losing victims method." The Defendant argued that a "net loss" method...more

Utah v. Hall

Is the Utah State Pyramid Scheme Act unconstitutionally vague? Utah

by Babener & Associates on

The Utah Court of Appeals held that the statute was constitutional. Generally a statute is unconstitutionally vague when people of average intelligence must guess as to its meaning. The court found the statute in question to...more

Louisiana v. Strother

Do multiple victims of the same investment scheme over a period of time justify an enhanced sentence under state sentencing...Louisiana

by Babener & Associates on

The Louisiana Court of Appeals was asked if multiple victims of the same investment scheme over a period of time was justification for an enhanced sentence under state sentencing guidelines. The full case and case summary...more

Probst v. Oklahoma

Can a partnership be a regulatable security if the partner had managerial authority on paper, but was unaware or never exercised...Oklahoma

by Babener & Associates on

Defendant Probst was in the business of estate planning. He advised clients to invest in a construction project undertaken by a firm he was intimately involved in, although that relationship was not divulged to the...more

Philpot v. Texas

Does the sale of a product as part of a promotional program exempt the program from state statutes forbidding endless chain...Texas

by Babener & Associates on

The Texas Court of Appeals held that the sale of a product does not allow a program to escape Texas' endless chain statute. The Philco Money Express was a pyramid marketing program that sold participants a quarterly financial...more

Delaware v. Ferro , 1988 WL 39996 (Del.Super. (1988) (Not Reported)

Delaware v. Ferro Delaware

by Babener & Associates on

The court held that the statute prohibiting pyramid schemes was constitutional, and that an airplane scheme fell under the definitions within the statute because it was a "sales device" that transferred a "right" to...more

Schrader v. Maryland , 69 Md.App. 377 (1987)

Is the Maryland Statute prohibiting the promotion of pyramid program unconstitutionally vague? Maryland

by Babener & Associates on

The Maryland Court of Special Appeals held that the statue was constitutional because the meaning of the words used could be derived by their common usage by a person of normal intelligence. In interpreting statutes, the...more

Rose v. Texas

Does a public filing of financial information pertinent to the sale of securities give investors constructive notice of the...Texas

by Babener & Associates on

Rose was the president of a small oil and gas company. He was convicted for securities fraud relating to the sale of limited partnership interests in an oil well venture without disclosing to investors that the equipment and...more

Wisconsin v. Dahlk

Can the owner of a warehouse where pyramid club meetings took place be held criminally liable for permitting real estate under his...Wisconsin

by Babener & Associates on

The Wisconsin Supreme Court held that the warehouse owner could be held liable for permitting his property to be used to promote a pyramid program. Wisconsin used the dominant factor test to determine that the scheme fell...more

US v. Simpson, 8 F.3d 546 (1993)

Is it erroneous for a sentencing court to not explain its reasoning for consecutive sentences and for disparate sentences between...Indiana

by Babener & Associates on

The Court of Appeals held that there was no rule that required an explanation for consecutive sentences, and that the record contained enough evidence that justified sentencing Simpson to a longer term that his...more

Schaffer v. Talerico , 118 Misc.2d 66 (1983)

Is a contract in furtherance of a pyramid scheme enforceable? New York

by Babener & Associates on

The Utica City Court held that the sales program was a pyramid scheme and enforcing the contract would be a violation of state public policy. Schaffer managed a sales program between Amway distributors where they would...more

Louisiana v. Pearaa

Is the Louisiana state statute imposing criminal liability for promoters of "endless chain" schemes unconstitutionally vague? Louisiana

by Babener & Associates on

The Louisiana Supreme Court held that the state statute prohibiting "endless chain" schemes was not unconstitutionally vague because a person of normal intelligence could understand the statute. Though the statute was...more

New York v. Luongo , 58 A.D.2d 895 (1977)

Can the promoter of a pyramid scheme be convicted of larceny by false pretenses if some of the investments made by the promoter...New York

by Babener & Associates on

The New York Appellate Division concluded that all of the promoter's promises need not be false to be convicted of larceny by false pretenses. The promoter made some investments in legitimate enterprises, but he also made...more

Wisconsin v. Lambert

Were the state regulations prohibiting chain distributor systems lawfully delegated to an administrative body? Wisconsin

by Babener & Associates on

The Wisconsin Supreme Court found that the legislature's delegation to the state agency was reasonable. The delegation set reasonable limits on the scope of the agency's power in crafting the specific prohibitions of chain...more

Tennessee v. Netto

Is the Tennessee state statute prohibiting lotteries and pyramid clubs unconstitutionally vague? Tennessee

by Babener & Associates on

The Tennessee Supreme Court ruled that the statute was not vague. To be found unconstitutionally vague, a statute must leave people of common intelligence to guess at its meaning. The Tennessee State Constitution flatly...more

US v. Herr, 338 F.2d 607 (1964)

Does acquittal of conspiracy require the dismissal of charges alleging the violation of federal securities laws?Illinois

by Babener & Associates on

The Court of Appeals held that criminal convictions need not be consistent with each other, and that each count of an indictment is a separate charge. The defendants were convicted of selling securities in violation of US...more

23 Results
View per page
Page: of 1

Follow MLM / Direct Sales Updates on:

"My best business intelligence,
in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.

Feedback? Tell us what you think of the new!