Legal Question in Business Law in Illinois

Pyramid Scheme or ??

I found an interesting opportuity. It offers me exclusive rights to my entire state if I buy $5,000 in inventory to start with. There is no other fee, just buy $5,000 in inventory, however the person in Kentucky who is contracting with me is getting 20% of my purchase, but the company (based in Illinois) is giving me full credit of $5,000 in inventory to resell. I have thoroughly checked the average sale price (established company) and see I'm getting the product for about 40% off retail. With my exclusive rights to all sales within my state I'm also able to add my own wholesalers under me who will sell the product I stock. They pay a 1,500 inventory purchase just like my 5,000 purchase. Of that the same guy in Kentucky gets 10% but the company here still credits his/her account the full 1,500 worth of inventory to resell. The wholesaler pays a higher price and I get the difference. Is this a pyramid scheme? Is this an illegal MLM? Just want to make sure before I sign the check.


Asked on 10/11/06, 12:07 am

1 Answer from Attorneys
Burton Padove Indiana and Illinois Lawyer, Burton A. Padove

Re: Pyramid Scheme or ??

At first glance this does give the appearance of possibly being a form of a pyramid scheme. However, if it is not, it does sound like a good opportunity. I suggest that you hire an attorney to further research this as there is no simple answer to your question.

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Answered on 10/11/06, 9:40 am


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