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Green Bill to Prohibit Pyramid Schemes Clears Assembly Panel

Legislation Would Establish Penalty of Up to Five Years’ Imprisonment

Legislation sponsored by Assemblyman Jerry Green to prohibit pyramid schemes was advanced by an Assembly committee on Monday.

“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-449) would make it a crime of the third degree, punishable by three to five years’ imprisonment, for a person to promote or sell a pyramid scheme. Knowingly participating in a pyramid scheme would be a crime of the fourth degree, which carries a penalty of up to 18 months in jail. A case in which an individual’s contribution to the pyramid scheme is $100 or less would be a disorderly persons offense. A disorderly persons offense carries a sentence of up to 6 months in a county jail.

New Jersey is the only state in the country without a statute that specifically outlaws pyramid schemes, Green said.

“Knowingly deceiving people and convincing them to recruit others to sell a nonexistent product isn’t a business model – it’s fraud,” said Green. “By specifically prohibiting pyramid schemes, this bill will make the severity of this matter clear in New Jersey.”

The measure was advanced by the Assembly Consumer Affairs Committee.