The%20Mathematics%20of%20a%20Pyramid%20Scam

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Pyramid Scheme or Income Opportunity?

An Income Opportunity advertised on the
internet promises instant wealth using a 2-Up
system to sell resale rights to a package of
assorted software and ebooks for 1000. In the
2-Up system, when you get two others to buy
into the system for 1000, the 1000 from each
goes to your sponsor. On the 3rd sale, and each
subsequent sale however, you get the 1000 plus
1000 for each of the first two sales of your
recruits. The ebooks and resale rights are said
to be valued many times the 1000 charged. By
definition, an illegal pyramid scheme is one
where no product of value is sold.
Too Good To Be True? Is This Illegal?

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ANSWER Maybe, maybe not. The legality of this
scheme depends on whether or not the 1000 worth
of ebooks and resale rights are truly worth 1000
if no down line sales of the 1000 packages are
made. If the only value of the package is to
recruit new members to buy the entire 1000
package to recruit more members, then it is a
pyramid scheme as shown below.
Each new level is 3 times larger than the
previous level, but at some point, you run out of
prospects to buy into the plan. In this
example, the bottom row represents over 2/3 or
all members. In general, pyramid schemes end up
leaving a majority losing money when no more
prosects are available.
For More Info, See Math and Pyramid Schemes