A pyramid scheme can look a lot like a legitimate enterprise

On Behalf of | Sep 28, 2018 | White Collar Crimes |

There is no shortage of South Carolina companies out there that promote the chance to earn immediate income and acquire residual wealth by following a proven formula. Sometimes, however, if the opportunity seems too great to be true, it just may be. That’s why investors and consumers should be aware of some signs that an enterprise may be fraudulent.

Many bogus enterprises are designed to look like legitimate businesses to encourage well-meaning investors to participate. In so-called pyramid schemes, early investors often do see a return on their investments. This encourages new investors hoping to capitalize in the same way. The first recognized pyramid scheme was perpetrated by Charles Ponzi over 100 years ago. This scam involved over $15 million in ill-gotten cash. Unfortunately, pyramid schemes most often actually sell nothing and generate cash simply from new investors’ fees.

Legitimate multi-level marketing opportunities that actually offer a product or service for sale can look very much like illegal pyramid schemes. Part of the reason for the confusion is that both types of businesses have similar characteristics. MLMs rely heavily on recruitment with less emphasis on the product. In fact, latecomers to an MLM business may find it all but impossible to make money.

It is common for a federal investigation to be in operation before white-collar criminal charges are filed. If an individual knows or suspects that they are the subject of an investigation, it is important to retain the advice of a white-collar criminal lawyer as soon as possible. Legal counsel could protect the rights of a suspect.


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