The Court of Appeals held that constructive knowledge was necessary to violate the state pyramid statute and that no constitutional rights were violated in this case. Nest Egg operated a pure pyramid scheme where participants forwarded cash to a person at the top of a provided list, and received the right to solicit further people who were required to submit money to the new person at the top of their list. The sponsoring members moved further and further up the list until they reached the top and were paid by the new people at the bottom of the list. At trial, Nest Egg claimed that it did not have actual knowledge of the content of state pyramid statute, and that actual knowledge was required by common law tradition. The Appeals Court disagreed because the statute specifically described "willful" as constructive knowledge, and the evidence presented was sufficient to show that Nest Egg had constructive knowledge. They also claimed that the trial court erred in allowing testimony from State witnesses via affidavit. The Appeals Court held that affidavits are not sufficient if live witnesses are available, but, because Nest Egg's own evidence did not contradict the affidavits, there was no prejudice from the practice in this case.
Case and case summary are also available online at: http://www.mlmlegal.com/legal-cases/SouthCarolina_v_NestEggSocietyTodayInc.php
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MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates
State, 4th Circuit, South Carolina |
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