{"id":373883,"date":"2016-03-31T21:35:29","date_gmt":"2016-04-01T02:35:29","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/state\/maryland-law\/maryland-pyramid-and-ponzi-scheme-laws.html"},"modified":"2018-03-08T00:00:00","modified_gmt":"2018-03-08T05:00:00","slug":"maryland-pyramid-and-ponzi-scheme-laws","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/state\/maryland-law\/maryland-pyramid-and-ponzi-scheme-laws.html","title":{"rendered":"Maryland Pyramid and Ponzi Scheme Laws"},"content":{"rendered":"\n
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Maryland 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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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

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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

In Maryland, as in every other state, it\u2019s illegal to operate a pyramid scheme<\/a> or Ponzi scheme<\/a>. Pyramid schemes involve business plans where participants are promised compensation primarily for enrolling new members into the scheme, rather than for making sales to the public. Pyramid and Ponzi schemes are one of the most famous white collar crimes<\/a>, thanks to criminal celebrities like Bernie Madoff<\/a>.<\/p>\r\n

In another famous case, a Maryland man, Garfield Taylor<\/a>, operated a Ponzi scheme in the D.C. area, causing investors to lose approximately $25 million. He ended up pleading guilty to securities fraud<\/a> in federal court.<\/p>\r\n

Maryland Pyramid or Ponzi Schemes: Statute<\/h2>\r\n

The following table outlines the main provisions of Maryland\u2019s pyramid and Ponzi scheme law.<\/p>\r\n\r\n
Code Section<\/b><\/td>\r\n

Maryland Criminal Law Code, Section 8-404: Pyramid Promotional Schemes<\/a><\/p>\r\n<\/td>\r\n<\/tr>

What\u2019s Prohibited?<\/b><\/td>\r\n

It\u2019s illegal to establish, operate, advertise, or promote a pyramid promotional scheme<\/a>, which is defined as a plan where a participant gives something of value (but not time) for the opportunity to receive compensation primarily for introduction others to the plan rather than selling goods, services, or other intangible property.<\/p>\r\n

It\u2019s not a defense to say the plan limited the number of participants. Nor is it a defense that for the payment of anything of value by the participant, he or she got any other property in addition to the right to receive compensation in the future.<\/p>\r\n

Basically, if it smells fishy and no product is actually being sold, it might be a scam<\/a>.<\/p>\r\n<\/td>\r\n<\/tr>

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

The penalty for illegal pyramid promotional scheme participation is imprisonment for not more than one year and a fine not exceeding $10,000.<\/p>\r\n

This crime is a misdemeanor<\/a>, but note that misdemeanors with imprisonment terms in Maryland can generally be prosecuted at any point, even far in the future, as there\u2019s no statute of limitations<\/a>.<\/p>\r\n<\/td>\r\n<\/tr>

Where Can Victims Get Help?<\/b><\/td>\r\nTo report a possible pyramid scheme<\/a> or other fraudulent business opportunity, call the Maryland Attorney General\u2019s Office Securities Division at 410-576-7042.
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\r\nIf you\u2019ve lost a significant amount to a fraudster, you may want to consider seeking compensation<\/a> in civil court, from a bankruptcy case of the Ponzi con artist, or by claiming tax losses. To do so, consult with a qualified local attorney or tax attorney.<\/td>\r\n<\/tr>
Where Can Accused Perpetrators Get Help?<\/b><\/td>\r\nIf you\u2019re facing a pyramid scheme related criminal charge, you should consult with an experienced Maryland criminal defense attorney or your appointed public defender<\/a> as soon as possible.<\/td>\r\n<\/tr><\/tbody><\/table>\r\n

Note: <\/i><\/b>State laws are always changing through legislative, judicial, or other means. While FindLaw works hard to ensure the accuracy of its legal resources, it’s a good idea to thoroughly research the law or check with an attorney to make sure you have the most recent information.<\/i><\/p>\r\n

Research the Law<\/h2>\r\n