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In Ohio, investment fraud can happen in a number of ways. Two of the most prevalent scams are "Pyramid" and "Ponzi" schemes.
Pyramid sales plans operate like giant chain letters. Participants pay to join, then recruit others in order to profit from the new recruits' fees. Although there may be some profit for the handful of people who join at the beginning, the remaining investors inevitably lose all their money.
A Ponzi scheme is a fraudulent investment operation that pays returns to investors from their own money or money paid by later investors rather than from actual earned revenue.
Ohio prohibits these type of activities under the following laws:
Here is a brief overview of how Ohio state combats pyramid and ponzi schemes to protect consumers through laws such as the Anti-Pyramid Sales Act (1974).
See White Collar Crimes, Financial Crimes, Securities Fraud, Wire Fraud, and Property Crimes for more information.
| Code Section | Anti-Pyramid Sales Act: Ohio Revised Code 1333.91, et seq. |
| Nicknames | Pyramid nicknames: "Pyramid sales plan or program" |
| What is Prohibited | Pyramid Scheme : A pyramid sales plan is any scheme, whereby a person pays money or some other financial benefit for the chance or opportunity to receive compensation, regardless of whether he also receives other rights or property, Ponzi Scheme : A swindle in which a quick return, made up of money from new investors, on an initial investment lures the victim into much bigger risks.Generally prosecuted as a federal crime, but can be prosecuted as state-crime under fraud and other state statutes. |
| Type of Crime | Felony or Misdemeanor-varies on nature of the crime |
| Who Enforces/Prosecutes the Law? | Ohio Attorney General Consumer Protection Division |
| Punishment | State prison or county jail, probation, fines, restitution to victim, community service, injunction/restraining order, revocation of business license, freezing business assets. |
There are several federal protections that may be available to you. To learn more about federal consumer protection laws, contact the following agencies:
State laws are constantly changing -- please contact a local consumer protection attorney or a criminal defense attorney who can help you better understand the current Ohio laws.
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