No, the bankruptcy trustee cannot recover damages under state law against those who profited from an unlawful pyramid scheme, but it can void fraudulent transfers of pyramid scheme profits. Canyon sold gold coins to investors. They paid 70% of the cash investment back to the investor in gold coins, and paid another 70% when the investor reach the bottom of a customer list. The company also paid commissions and bonuses to sale people who induced others to invest money with the company. The company depended on a continued flow of new customers to maintain the guise of a legitimate enterprise, and the bankruptcy court concluded that it was an unlawful pyramid scheme. The bankruptcy court voided the transactions between the company and customers as fraudulent, and allowed the trustee to recover the money for the benefit of the company's creditor- other investors. However, the trustee did not have standing to pursue damages claims against those who made money from the scheme...
The full case is also available online at: http://www.mlmlegal.com/legal-cases/InReCanyonSystemsCorp.php
Firefox recommends the PDF Plugin for Mac OS X for viewing PDF documents in your browser.
We can also show you Legal Updates using the Google Viewer; however, you will need to be logged into Google Docs to view them.
Please choose one of the above to proceed!
LOADING PDF: If there are any problems, click here to download the file.