Various Pyramid Schemes

These are all actual court opinions. All of these cases were prosecuted under fraud or consumer protection laws.

U.S. v. Armantrout

In this case, the "cover product" was carpeting. You'll note that the court more or less dispenses with the idea that actually selling carpet was the point of Armantrout's scheme. I've included the whole opinion, even though there's some discussion of evidentiary matters at the end, because the opinion has an interesting point, which is that the fraudulent nature of a scheme is determined by objective means - so it doesn't matter whether or not anyone is actually fooled by the scheme, and it doesn't matter if the instigator or the participants actually think it will work or not. What matters in this case is whether the scheme is such that fraud is built into it, and in the case of pyramid schemes, it clearly is.

U.S. v. Blachley

The "cover product" here is water softeners. Again, this is a beautiful example of a place where water softeners had nothing to do with how the money was actually made. Again you will see that nobody is fooled by this. The cops weren't fooled by it, the prosecutor wasn't, the judge wasn't, and the appellate court wasn't, and Blachley and his chickenboner friend went to jail.

Ger-Ro-Mar, Inc. v. Federal Trade Commission

This marvelous opinion must be seen to be believed. Yes, it is about a pyramid scheme involving the sale of bras, brassieres, and girdles. Yes, the scammers actually tried to defend it by saying that they were stupid chickenboners who thought that the pyramid could go on forever. Yes, they were laughed right into prison.

U.S. v. William Savran & Associates

This opinion is useful to us because it reprints an entire court hearing in which the originator of a mass-mailing pyramid scheme is questioned extensively about what he did in setting it up and perpetrating it on helpless victims. Chilling and triumphant. Eat it raw.

U.S. v. Fabian, et al

Watch for the 1964 New York Yankees in this opinion about a pyramid scheme that used stereos as its "cover product". Again, the scammers try to claim that they didn't know it wouldn't work. Again they get their hinders hauled off to prison. Extra credit if you notice how long it took the jury to convict them: exactly 60 minutes.
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Jason Corley -- corleyj@cobweb.scarymonsters.net