{"id":372906,"date":"2016-04-11T01:22:14","date_gmt":"2016-04-11T06:22:14","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/state\/hawaii-law\/hawaii-pyramid-and-ponzi-schemes-laws.html"},"modified":"2016-06-20T19:51:25","modified_gmt":"2016-06-21T00:51:25","slug":"hawaii-pyramid-and-ponzi-schemes-laws","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/state\/hawaii-law\/hawaii-pyramid-and-ponzi-schemes-laws.html","title":{"rendered":"Hawaii Pyramid and Ponzi Schemes Laws"},"content":{"rendered":"\n
\n \n
\n

Hawaii Pyramid and Ponzi Schemes Laws<\/h1>\n
\n
\n

Created by FindLaw’s team<\/a> of legal writers and editors<\/i><\/p>\n\n | Last updated\n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
\n

This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
\n

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

Both pyramid schemes<\/a> and Ponzi schemes<\/a> are illegal scams that promise investors a high rate of return on their investment and attempt to pay those investors from funds contributed by an endless chain of new investors who pay to join the scheme. In a pyramid scheme, members are compensated based on the number of new members that they can convince to join, while the perpetrator of a Ponzi scheme convinces people to invest in a fictitious business that appears to be profitable because new investors keep investing funds.<\/p>\n

Both scams are forms of investment fraud that are designed to fraudulently deprive people of their money. In Hawaii, pyramid schemes are referred to as "endless chain schemes." The table below outlines the law that criminalizes endless chain schemes in Hawaii.<\/p>\n\n

Code Section <\/b><\/p>\n<\/td>\n

Hawaii Revised Statutes section 480-3.3<\/a>: Endless Chain Schemes<\/b><\/td>\n<\/tr>

What’s Prohibited? <\/b><\/p>\n<\/td>\n

Contriving, preparing, setting up, proposing, or operating any endless chain scheme.<\/td>\n<\/tr>

What’s an Endless Chain Scheme?<\/b><\/p>\n

 <\/p>\n<\/td>\n

Any scheme for the disposal or distribution of property where a participant party pays valuable consideration for the chance to receive compensation for introducing one or more new people into the scheme, or for the chance to receive compensation when a person introduced by the participant introduces a new participant.<\/p>\n

Compensation doesn’t mean or include payments based on sales made to people who aren’t participants in the scheme and who aren’t purchasing in or participating in the scheme.<\/p>\n<\/td>\n<\/tr><\/tbody><\/table>\n

Common Examples of Pyramid Schemes<\/h2>\n