{"id":374832,"date":"2016-04-11T01:23:24","date_gmt":"2016-04-11T06:23:24","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/state\/nevada-law\/nevada-pyramid-and-ponzi-schemes-laws.html"},"modified":"2016-06-19T23:00:00","modified_gmt":"2016-06-20T04:00:00","slug":"nevada-pyramid-and-ponzi-schemes-laws","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/state\/nevada-law\/nevada-pyramid-and-ponzi-schemes-laws.html","title":{"rendered":"Nevada Pyramid and Ponzi Schemes Laws"},"content":{"rendered":"\n
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Nevada 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 updated\n

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Pyramid schemes and Ponzi schemes are both notorious types of investment fraud. Victims of pyramid schemes<\/a> (also referred to as "endless chains") and Ponzi schemes<\/a> are persuaded to contribute an initial investment by the promise of a high return on their investment. In reality, however, the scheme pays investors from funds contributed by new recruits. The key difference between pyramid and Ponzi schemes is how new investors are recruited.<\/p>\r\n

Pyramid Schemes<\/h2>\r\n

In a pyramid scheme, the scammer recruits an initial round of investors who are then required to go out and recruit the next round of investors, and so forth. Generally an overpriced product (for example, beauty products, new inventions, or "miracle" cures) acts as a gimmick that is purportedly sold. However, the focus of the scheme isn’t selling a legitimate product or service but rather to recruit new members into the pyramid.<\/p>\r\n

Ponzi Schemes<\/h2>\r\n

Ponzi schemes, named after the con-artist Charles Ponzi, are very similar to pyramid schemes except that the scammer recruits all of the new investors. Here investors are given the "opportunity" to invest in a non-existent fund that promises quick returns. Early investors are then paid with the money invested by latter investors.<\/p>\r\n

Common examples of Ponzi schemes:<\/p>\r\n