{"id":372009,"date":"2016-04-11T01:21:32","date_gmt":"2016-04-11T06:21:32","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/state\/colorado-law\/colorado-pyramid-and-ponzi-scheme-laws.html"},"modified":"2018-03-08T01:00:00","modified_gmt":"2018-03-08T06:00:00","slug":"colorado-pyramid-and-ponzi-scheme-laws","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/state\/colorado-law\/colorado-pyramid-and-ponzi-scheme-laws.html","title":{"rendered":"Colorado Pyramid and Ponzi Scheme Laws"},"content":{"rendered":"\n
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Colorado Pyramid and Ponzi Scheme Laws<\/h1>\n
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Created by FindLaw’s team<\/a> of legal writers and editors<\/i><\/p>\n\n | Last updated\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Under Colorado law, a pyramid scheme<\/a> or Ponzi scheme<\/a> is \u201cany program utilizing a pyramid or chain process by which a participant in the program gives a valuable consideration in excess of fifty dollars for the opportunity or right to receive compensation or other things of value in return for inducing other persons to become participants for the purpose of gaining new participants in the program.\u201d Even as one of the most famous white collar crimes<\/a>, pyramid schemes can be hard to wrap your mind around. This is a quick summary of pyramid and Ponzi scheme laws in Colorado.<\/p>\r\n

Overview of Colorado Pyramid or Ponzi Scheme Laws<\/h2>\r\n

The best way to protect yourself from a pyramid or Ponzi scheme is to identify it before you get roped in. You can learn more about the signs of a pyramid scheme<\/a> and ask these questions<\/a> to anyone trying to sell you investments or business opportunities.<\/p>\r\n

However, both victims and the accused would do well to inform themselves about how pyramid and Ponzi schemes are defined and punished in Colorado. The following table outlines Colorado\u2019s pyramid scheme laws.<\/p>\r\n\r\n

Code Sections<\/b><\/p>\r\n<\/td>\r\n

COL. REV. STAT. \u00a76-1-105(1)(q):<\/a> Deceptive Trade Practices<\/p>\r\n<\/td>\r\n<\/tr>

What is Prohibited?<\/b><\/p>\r\n<\/td>\r\n

Contriving, preparing, setting up, operating, publicizing by means of advertisements, or promoting any pyramid promotional scheme<\/p>\r\n<\/td>\r\n<\/tr>

Penalties<\/b><\/p>\r\n<\/td>\r\n

Penalties from Civil Actions Brought by the Attorney General<\/u><\/p>\r\n

The attorney general or a district attorney may bring a civil action on behalf of the state to seek the imposition of a fine of $2,000 for each such violation. The maximum civil penalty is $500,000.<\/p>\r\n

The attorney general or a district attorney may also obtain a restraining order or an injunction on the violation.<\/p>\r\n

Criminal Penalties<\/u><\/p>\r\n

Any person who promotes a pyramid promotional scheme is guilty of a class 1 misdemeanor, punishable by up to 18 months in jail and\/or a $5,000 fine. A second or subsequent conviction is a class 6 felony, punishable by up to 18 months in jail and\/or a $100,000 fine.<\/p>\r\n<\/td>\r\n<\/tr>

Who Enforces these Laws?<\/b><\/p>\r\n<\/td>\r\n

The Colorado Attorney General enforces the prohibition of pyramid schemes in Colorado.<\/p>\r\n<\/td>\r\n<\/tr>

Where Can Victims Get Help?<\/b><\/p>\r\n<\/td>\r\n

If you think you may be a victim of a pyramid scheme, report it to the Colorado Attorney General:<\/p>\r\n

Colorado Attorney General Consumer Protection Hotline
\r\nToll Free: 800-222-4444
\r\nMetro Denver: 303-222-4444
\r\nwww.coloradowattorneygeneral.gov\/cp<\/a><\/p>\r\n<\/td>\r\n<\/tr><\/tbody><\/table>\r\n

Note:<\/b> State laws are always subject to change through the passage of new legislation, rulings in the higher courts (including federal decisions), ballot initiatives, and other means. While we strive to provide the most current information available, please consult an attorney or conduct your own legal research to verify the state law(s) you are researching.<\/i><\/p>\r\n

Colorado Pyramid and Ponzi Scheme Laws: Related Resources<\/h2>\r\n

You can also visit the following FindLaw sections on for more articles and information on this topic:<\/p>\r\n