In the Nutmeg State, there are various laws which prohibit pyramid and Ponzi schemes. A pyramid scheme is the sale of goods, services, or rights in exchange for an investment which is contingent upon procuring others who must also do the same, thereby perpetuating a chain of people in the scheme. Those who invest in the scheme get little or nothing for their investment.
Pyramid and Ponzi schemes are deceptive trade practices and therefore falls under the Connecticut Unfair Trade Practices Act which is subject to additional penalties. This is a quick summary of Connecticut pyramid and Ponzi scheme laws.
Connecticut Pyramid and Ponzi Scheme Laws
This table outlines pyramid and Ponzi scheme laws in Connecticut.
CONN. GEN. STAT. §§ 42-140, 42-145
Connecticut Unfair Trade Practices Act
Advertising the sale of goods, services, or rights or actually selling goods, services, or rights in exchange for a rebate or some other return on investment, which is contingent upon procuring others who must also pay a fee or invest and procure others to do the same.
A home seller offering to give a commission or rebate to the buyer in exchange for the buyer giving names of prospective purchasers or otherwise aiding in a sale to another person.
Engaging in unfair methods of competition or unfair or deceptive acts or practices in the conduct of any trade or commerce.
Injured parties have a right to sue for restitution and seek damages in addition to recovering any costs and reasonable attorney's fees either separately or as a class action lawsuit.
Unfair trade practices are punishable by up to $5,000 for each violation.
The Commissioner of of Consumer Protection may also request that the Attorney General obtain an injunction. If the injunction is violated, the Attorney General may seek up to $25,000 in fines for each violation.
Pyramid schemes involving home sales are Class C midemeanors subject to up to 3 months in prison and up to $500 in fines in addition to any of the above penalties.
|Who Enforces these Laws?
||The Commissioner of Consumer Protection enforces the prohibition of pyramid schemes in Connecticut.
|Where Can Victims Get Help?
If you think you may be a victim of a pyramid or Ponzi scheme, report it to the Commissioner of Consumer Protection by filing a complaint:
Within Hartford and Outside Connecticut: 1-860-713-6100
Toll-Free in Connecticut: 1-800-842-2649
Address: 165 Capital Avenue, Hartford, Connecticut 06106
The best way to protect yourself from a pyramid or Ponzi scheme is to know the signs. It is important to become informed about the company in which you are planning to invest.
Connecticut Pyramid and Ponzi Scheme Laws: Related Resources
Pyramid and Ponzi schemes are complex and the laws which prohibit them can be confusing. If you have been accused of participating in a pyramid or Ponzi scheme and need help, you can contact a Connecticut criminal defense attorney. If you would like legal assistance with a consumer fraud matter, you can contact a Connecticut consumer protection attorney. You can also visit FindLaw’s sections on Fraud and Consumer Protection for more articles and information on this topic.