News from
Speaker Pro Tempore Green
|
|
For
Release:
|
Speaker Pro Tempore Jerry Green
Housing & Community
Development Committee Chair
p: 908-561-5757
|
Dec.
8, 2015
|
Assembly OKs Green
Bill to Prohibit Pyramid Schemes
Legislation Would
Establish Penalty of Up to Five Years’ Imprisonment
(TRENTON) – Legislation sponsored by Assemblyman Jerry Green to
outlaw pyramid schemes recently cleared the Assembly. It will now go to the
Senate for further review.
The bill (A-449) makes it a crime of the third degree, punishable by
three to five years’ imprisonment, for a person to promote or sell a pyramid
scheme. This bill establishes criminal penalties for promoting and
participating in “pyramid promotional schemes.”
Green
notes in the bill that a pyramid promotional scheme requires participants to
recruit other individuals into the scheme in order for the original
participants to receive any compensation. The scheme is designed to
compensate only those participants who initially join the pyramid, while later
participants lose money.
“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 makes it a crime of the third degree to knowingly promote or sell a
pyramid promotional scheme. Under the bill, a "pyramid promotional
scheme" is defined as any plan or operation in which a participant gives
consideration for the right to receive compensation that is derived primarily
from the recruitment of other persons as participants in the plan or operation,
rather than from the sales of goods, services, or intangible property by the
participant or by participants to others.
"Consideration"
is defined as the payment of cash or the purchase of goods, services, and
intangible property, and does not include the purchase of goods or services
furnished at cost to be used in making sales and not for resale.
“New Jersey is the only state in the country without a statute that
specifically outlaws pyramid schemes,” Green added. “Knowingly deceiving people
and convincing them to recruit others to sell a nonexistent product isn’t a
business model – it’s fraud. By specifically prohibiting pyramid schemes, this
bill will make the severity of this matter clear in New Jersey.”
The
bill also provides that knowing participation in a pyramid promotional scheme
is a crime of the fourth degree, unless the amount the person contributed to
the scheme was $100 or less, in which case it is a disorderly persons offense. A disorderly persons offense carries a sentence of up to 6 months in
a county jail.
The
bill specifically exempts plans or operations in which consideration is given
by participants in return for the right to receive compensation based on their
sales or personal use of goods, services, or intangible property. The bill also
exempts plans and operations that implement an appropriate inventory repurchase
program and that do not promote inventory loading.
The measure was approved 64-0 on Monday, December 3 by the full Assembly.
The Assembly Consumer Affairs Committee released the bill on November 9.
No comments:
Post a Comment