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

Is a contract in furtherance of a pyramid scheme enforceable?

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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 circulate products among themselves for bonuses and recruitment fees. The products did not actually change hands; invoices were merely circulated representing their sale and shipment. The Court found that the plan was a pyramid scheme because no products were actually sold, and the scheme depended on the recruitment of additional member to be viable. The court refused to honor the claim or counter-claims of the parties.

Full case and case summary also available online at: http://www.mlmlegal.com/legal-cases/Schaffer_v_Talerico.php

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Reference Info:State, 2nd Circuit, New York | 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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