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Green, Benson & Moriarty Bill to Establish Penalties for Pyramid Scheme Participation Clears Assembly Panel

Legislation sponsored by Assembly Democrats Jerry Green, Daniel R. Benson and Paul Moriarty to establish criminal penalties for promoting or participating in a pyramid scheme recently was advanced by an Assembly committee.

“Pyramid schemes make victims out of vulnerable people who often are just looking for a way to make ends meet,” said Green (D-Middlesex/Somerset/Union). “Individuals who understand that an enterprise is a pyramid scheme and still choose to participate ought to face serious consequences.”

The bill (A-2004) would make it a crime of the second degree, generally punishable by five to ten years’ imprisonment, for a person to conspire with another person as an organizer, supervisor, financier or manager of a pyramid promotional scheme. The bill also would permit the court to impose a fine of up to $250,000.

Recruiting for a pyramid promotional scheme, or soliciting or inducing another person to participate in a scheme, would be a crime of the fourth degree, generally punishable by up to 18 months’ imprisonment.
Under the bill, a pyramid promotional scheme is defined as “any scheme or course of conduct by which a person gives consideration for the opportunity to receive compensation that is derived primarily from a person’s introduction of another person to participate in the scheme or course of conduct rather than from the sale of a product by a person introduced into the scheme or course of conduct.”

“New Jersey is the only state in the nation without a statute that clearly categorizes a pyramid scheme as the crime that it is,” said Benson (D-Mercer/Middlesex). “This legislation is a declaration that this kind of deception will not be tolerated as a business model.”

“Outlining a clear definition of, and penalty for, a pyramid scheme in our state will make it easier for prosecutors to identify and file charges against individuals who participate in these scams with malicious intent,” said Moriarty (D-Camden/Gloucester). “Pyramid schemes ruin lives. New Jersey must ensure that those who engage in them face the appropriate punishment.”

The measure was advanced on Thursday by the Assembly Consumer Affairs Committee, of which Moriarty is chair.