King v. Texas

Does an acknowledgement form signed by participants allow an otherwise illegal pyramid scheme to avoid liability?


The Texas Court of Appeals upheld the Trial Court's Order finding King guilty, and denied her claims that the acknowledgment signed by the participants had any effect on the legality of the program. King solicited new members at dinner parties held at current member's homes. Those celebrating a "birthday" in the program were paid substantial sums of money, and new recruits were encouraged to sign up in order to perpetuate the scheme. When a new participant paid their money into the program they signed a form indicating that the money was a gift, that they were not coerced into paying over the money, and they understood that they should expect nothing in return. The structure of the meeting was different than the form signed: people were encouraged to join because of the amount of money that they would make. Multiple witnesses testified that they were pressured into participating in the program. The Court of Appeals held that the form signed by the participants did not change the legal structure of the scheme: it clearly fell under that state pyramid statute, and the convictions were upheld.

The case and case summary are also available online at:

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Published In: MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates

Reference Info:State, 5th Circuit, Texas | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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