Multi-Level Marketing Crimes

Before discussing multi-level marketing crimes in Miami, let's start with an understanding of multi-level marketing itself. Multilevel marketing can be described as a tactic some direct selling companies use to induce their current distributors to hire new distributors by paying out a percentage of the sales of their recruits to established distributors. The hires are often referred to as the downline. All distributors do make money by selling the goods directly to customers. Think of well-established companies like Avon, for example.

A pyramid scheme reflects an investment based purely on a hierarchical structure. New recruits form the basis of the pyramid and provide the funding, or so-called returns, given above to earlier investors / recruits. The scheme is launched by a person or business beginning to attract investors with a guaranteed high yield bid. The early buyers do get a high rate of return at the outset, but these profits are paid for by new hires and are not a return on any actual investment. If the scheme does not keep bringing in new hires, the profits may decline and the company may collapse.

The Ponzi scheme orchestrated by Bernie Madoff serves as a reminder that "White Collar Crimes" are not without its victims. Bernie's scheme caused the loss of approximately $18,000,000,000 (that's billions!). Additionally, in our own backyard, Nevin Shapiro took victims for millions. It's because of these high profile cases and others like them that the government is devoting unlimited resources to investigate and prosecute multi-level marketing crimes.

It's possible to argue that there is no difference between a multi-level marketing system and a pyramid. The Federal Trade Commission, however, does recognize legal multi-level marketing systems. Things come down to the products between the two. Whether the company and its distributors earn their money largely from the selling of goods to end customers, and not from the collection of product boxes in the garage of a manufacturer, then this it is likely a legitimate enterprise. A pyramid system provides compensation forthe ones at the top with membership fees and bonuses and recruitment fees.

While multi-level marketing is not illegal in itself, attempting to commit fraud or defrauding others through one of these system may constitute a multi-level marketing crime. A person accused of committing or attempting to execute a multi-level marketing scheme in Florida may be subject to charges of wire fraud or mail fraud, based on the circumstances of the case, if the United States Postal Service or interstate wires like the Internet or television are utilized during the alleged scheme.

When evaluating multi-level marketing systems, it's important recognize the red flags to determine whether it is not legit. Consider the following warning signs when it comes to recognizing possible pyramid schemes:

  • A chance to join a community, plan, system or team where member recruitment is necessary to start making money.
  • The scheme includes offerings of goods or services of low or dubious value which are intended only for scheme prevention.
  • High capital expenses are incurred to pay for vast amounts of products.
  • The scheme does not have goods or services for sale.
  • The seller repeatedly reinforces that the scheme is not a pyramid and is entirely legitimate.
  • Look outfor products or schemes which assert revenue or winnings guarantees.
  • Keep in mind that friends and loved ones may attempt to involve you in the scam without understanding it's a scam.

If you or someone you know has been charged or are under investigation for involvement in a multi-level marketing crime such as a Ponzi Scheme, the Law Offices of Mark Eiglarsh is here to help you learn about your rights and the defenses that may be available to you.

The general information provided above about multi-level marketing crimes in Fort Lauderdale is meant for educational purposes only and is not a substitute for speaking directly with an attorney about the facts and circumstances of your case. Please call 954-500-0003 in Broward or 305-674-0003 in Miami to schedule a consultation with the Law Offices of Mark Eiglarsh.

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