Missouri Pyramid and Ponzi Scheme Laws
Created by FindLaw's team of legal writers and editors | Last reviewed June 19, 2016
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In Missouri, it’s illegal to operate or participate in a pyramid scheme or Ponzi scheme. Pyramid schemes involve business plans where participants are promised payment or services primarily for enrolling others 504 into the scheme, rather than for sales to the public. They’re also one of the most famous white collar crimes, largely due to Bernie Madoff and his pyramid scheme.
One well-known Missouri pyramid scheme involved the "Original Dinner Party," which was a form of gifting-type pyramid scheme run by two women in the St. Louis area. The Attorney General at the time filed suit against the perpetrators of this scheme for the damages they reportedly caused, where most participants ended up $5,000 poorer.
Missouri Pyramid or Ponzi Scheme Laws: Statute
The following table highlights the main provisions of Missouri's pyramid and Ponzi scheme law.
Code Sections |
|
What Is Prohibited? |
No person can sell, offer, or participate in a pyramid sales scheme in Missouri. |
Penalty |
Any pyramid sales scheme contract is void. Any person who gets another person to participate in a pyramid scheme 404 will be liable for damages equal to double what the person paid into the scheme. If a successful enforcement action, court costs and attorney's fees will also have to be paid by the defendant. In Missouri, the time period to bring this type of case, also called the statute of limitations, is 5 years from the date of the payment into the pyramid scheme. Additionally, anyone who knowingly violates the Merchandising Practices Act (which includes the pyramid scheme ban) with the intent to defraud can be found guilty of a Class D felony 504. Class D felonies are subject to up to a 4-year prison 504 sentence and up to a $5,000 fine 504. |
Who Enforces this Law? |
The Missouri Attorney General 404 enforces the prohibition of pyramid or Ponzi schemes. However, prosecuting attorneys in Missouri may also go after pyramid scheme perpetrators for criminal actions. For schemes that cross state lines, the U.S. Department of Justice 404 may start a legal action based on federal law. |
Where to Get Help (Victims) |
If you believe you may be a victim of a pyramid sales scheme, learn more about the signs of a pyramid scheme 403 and ask your business sponsor these questions 404. If it may be an illegal pyramid scheme, report it to your local police department 404 and the Missouri Attorney General's Consumer Protection Hotline online or at 1-800-392-8222. |
Where to Get Help (Accused Perpetrators) |
Dealing with any criminal or civil accusation can be a serious undertaking. If you find yourself facing any pyramid scheme related charges, you should contact an experienced Missouri criminal defense attorney or public defender for assistance. |
Note: State laws are constantly changing -- it's important to verify the state law(s) you are researching.
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