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THE CONFIDENCE TO WIN.

How does Florida handle Ponzi schemes?

On Behalf of | Dec 2, 2021 | white collar crimes

Under Florida state law, Ponzi schemes and other types of financial fraud are strictly prohibited under gambling laws. Ponzi schemes, also known as pyramid schemes, offer an unrealistic amount of profit or gain in exchange for extremely limited or even absent financial risk.

It is important to understand the state’s definition of pyramid schemes along with potential penalties for the offenses that fall under this category.

Defining a pyramid scheme

Florida State Legislature discusses the handling of pyramid schemes. First, Florida law prohibits any participation or organization of a club, chain letter or group that charges dues and requires the recruitment of other members from their newest members. This gets classified under state law as a sort of illegal lottery.

This same law defines pyramid schemes as any club in which a member pays $100 or more in dues and must participate in the recruitment of other members after they join. They cannot participate in marketing, sales or other recruitment options until they do so.

What are the penalties?

The penalties for participating in these types of schemes will actually result in first-degree misdemeanor charges. This can include a stay of up to 12 months in county jail. It can also include fines of up to $1,000, as well as the court order to pay restitution for any financial losses the victims suffered.

For those who engage in willfully deceptive commerce, on the other hand, the penalty is even steeper. This can result in fines of $10,000 for every action, along with restitution. If the victims were senior citizens or had cognitive disabilities, additional penalties may apply.

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