§ 359-FFF — Chain distributor schemes prohibited

§ 359-fff. Chain distributor schemes prohibited. 1. It shall be\nillegal and prohibited for any person, partnership, corporation, trust\nor association, or any agent or employee thereof, to promote, offer or\ngrant participation in a chain distributor scheme.\n 2. As used herein a "chain distributor scheme" is a sales device\nwhereby a person, upon condition that he make an investment, is granted\na license or right to solicit or recruit for profit or economic gain one\nor more additional persons who are also granted such license or right\nupon condition of making an investment and may further perpetuate the\nchain of persons who are granted such license or right upon such\ncondition. A limitation as to the number of persons who may participate,\nor the presence of additional conditions affecting eligibility for such\nlicense or right to recruit or solicit or the receipt of profits\ntherefrom, does not change the identity of the scheme as a chain\ndistributor scheme. As used herein, "investment" means any acquisition,\nfor a consideration other than personal services, of property, tangible\nor intangible, and includes without limitation, franchises, business\nopportunities and services, and any other means, medium, form or channel\nfor the transferring of funds, whether or not related to the production\nor distribution of goods or services. It does not include sales\ndemonstration equipment and materials furnished at cost for use in\nmaking sales and not for resale.\n 3. A chain distributor scheme shall constitute a security within the\nmeaning of this article and shall be subject to all of the provisions of\nthis article.\n