{"id":373582,"date":"2016-04-11T01:22:34","date_gmt":"2016-04-11T06:22:34","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/state\/kentucky-law\/kentucky-pyramid-and-ponzi-schemes-laws.html"},"modified":"2016-06-20T00:00:00","modified_gmt":"2016-06-20T05:00:00","slug":"kentucky-pyramid-and-ponzi-schemes-laws","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/state\/kentucky-law\/kentucky-pyramid-and-ponzi-schemes-laws.html","title":{"rendered":"Kentucky Pyramid and Ponzi Schemes Laws"},"content":{"rendered":"\n
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Kentucky Pyramid and Ponzi Schemes Laws<\/h1>\n
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Created by FindLaw’s team<\/a> of legal writers and editors<\/i><\/p>\n\n | Last reviewed\n

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"Pyramid" and "Ponzi" schemes are both types of investment fraud, and both are illegal in Kentucky.<\/p>\r\n

What’s a Pyramid Scheme?<\/h2>\r\n

In a classic pyramid scheme, members make money solely by recruiting new participants into the scheme. Generally, new recruits are convinced to join by the promise of high returns in exchange for paying a sign-up fee and then recruiting other people to do the same. The pyramid system can only function so long as enough new members are recruited to pay out the existing members. When there aren’t enough new recruits then the whole system comes crashing down.<\/p>\r\n

Pyramid schemes come in many forms but they all function based on recruiting new members and not on any real investment or sale of goods. Often it can be hard to spot a pyramid scheme because the organization appears to sell a product, but sometimes these products are only sold to hide the organization’s pyramid structure.<\/p>\r\n

Common Examples of Pyramid Schemes:<\/p>\r\n