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Arkansas Pyramid and Ponzi Schemes Laws

Charles Ponzi was a con artist in the 1920s who became famous for conducting what is now referred to as a "Ponzi scheme." A Ponzi scheme is a scam where the perpetrator sets up a fraudulent investment service and convinces investors to pay into the scheme. These original investors are then paid with money from the next round of investors, and so on.

A pyramid scheme follows roughly the same pattern, however, the structure of the organization is a bit different. In a pyramid scheme the original recruiter attracts only the first round of investors, and it is these investors who are expected to find new recruits of their own in order to grow the scam. However, the terms "Ponzi scheme" and "pyramid scheme" are often used interchangeably.

In Arkansas, these scams are illegal and are referred to as "pyramiding devices." The following table outlines Arkansas' pyramid and Ponzi scheme laws.

Code Section

Arkansas Code section 4-88-109: Pyramiding Devices

What's Prohibited?

Contriving, preparing, setting up, proposing, or operating any "pyramiding device."

Definition of "Pyramiding Device"

A pyramiding device is any scheme where a participant pays for the chance to receive "compensation" primarily from either:
  • Introducing one or more new people into the scheme, or
  • When a person introduced by the participant introduces a new participant into the scheme

Definition of "Compensation"

Compensation is something of value, not including payments based on sales to people who aren't participating in the scheme and who aren't purchasing in order to participate in the scheme.

Statute of Limitations

All prosecutions under this law must be brought within five years of the violation.


Class A misdemeanor. Punishable by a fine of up to $2,500 and/or imprisonment of up to one year.

Enhanced Penalties When Victims are Elderly or Disabled

In Arkansas, offenders who establish or operate pyramid schemes that victimize elderly or disabled people may face additional civil penalties. Here, "elderly" is defined as anyone 60 years old or older, and "disabled" refers to people who have a physical or mental impairment that substantially limits one or more of that person's major life activities. For each violation that is committed against an elderly or disabled person the court can impose an additional fine of up to $10,000. This law is in place to help deter potential offenders from targeting people who may be particularly susceptible to being victimized by a pyramid scheme.

Additional Resources

State laws change frequently. For case specific information regarding Arkansas' pyramid and Ponzi scheme laws contact a local consumer protection attorney or a criminal defense lawyer.

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