http://www.crimes-of-persuasion.com/...d/pyramids.htm
When it comes to pyramid schemes it is illegal to:
- pay money for the right to receive compensation for recruiting new participants;
- require a participant to buy specific products before he/she is allowed to join the plan;
- sell unreasonable quantities of the product or products to participants (this practice is called inventory loading); and
- refuse to allow participants to return products on reasonable commercial terms.
People who break the law relating to multi-level marketing or pyramid selling can be convicted and sentenced to a fine or a prison term. Amendments to the Act passed in 1999 now allow the court to impose a fine of up to $200,000 or a prison term of up to one year, or both, for a less serious offence. For a more serious offence, the court may set its own fine or a prison term of up to five years, or both.
The Bureau conducts its investigations in private and keeps confidential the identity of the source and the information provided. However, if someone has important evidence about an offence under the Act, that person may be asked to testify in court.
Sometimes, no clear line separates illegal pyramid schemes from legitimate multilevel marketing programs. To differentiate between the two regulators in the U.S. evaluate the marketing strategy (e.g., emphasis on recruitment versus sales) and the percentage of product sold compared with the percentage of commissions granted.