New Jersey § 2c:20-39

§ 2c:20-39.

a. (1) A person is a leader of a pyramid promotional scheme if he conspires with any

other person as an organizer, supervisor, financier, or manager to engage in a scheme

or course of conduct by which a person gives consideration for the opportunity to

receive compensation that is derived primarily from a person's introduction of another

person to participate in the scheme or course of conduct rather than from the sale

of a product by a person introduced into the scheme or course of conduct. Leader of a pyramid promotional scheme is a crime of the second degree. Notwithstanding the provisions of subsection a. of N.J.S.2C:43-3 , the court may impose a fine not to exceed $250,000. (2) A person is a recruiter for a pyramid promotional scheme if he solicits or induces

any other person to participate in a scheme or course of conduct by which a person

gives consideration for the opportunity to receive compensation that is derived primarily

from a person's introduction of another person to participate in the scheme or course

of conduct rather than from the sale of a product by a person introduced into the

scheme or course of conduct. Recruiter for a pyramid promotional scheme is a crime of the fourth degree. b. It is an affirmative defense to a prosecution for a violation of paragraph (1)

or (2) of subsection a. of this section if the defendant proves by a preponderance

of the evidence all of the following: (1) participants in the scheme or course of conduct give consideration in return for

the right to receive compensation based upon purchases of goods, services, or intangible

property by participants for personal use, consumption, or resale; (2) the scheme or course of conduct does not promote inventory loading; and (3) the scheme or course of conduct implements an inventory repurchase program as

set forth in subsection c. of this section. c. To qualify as an inventory repurchase program for the purposes of subsection b.

of this section, there shall be an enforceable agreement by the business enterprise

to repurchase all unencumbered products that are in commercially resalable condition

at a price not less than 90 percent of the amount actually paid by the participant

for the products being returned, less any reasonable consideration as may have been

received by the participant for the purchase of the products being returned. In the case of consumable or durable goods, a product is in commercially resalable

condition if it is unopened, unused, and within its commercially reasonable use or

shelf-life period. A product that is no longer marketed by the business enterprise because it is a

discontinued, seasonal, or special promotional item shall be considered commercially

resalable, unless before the participant purchased the product it was clearly disclosed

to the participant and the participant acknowledged in writing that the product was

sold as a discontinued, seasonal, or special promotional item and would not be returnable. In the case of service products and intangible property, including Internet websites,

the unexpired portion of any contract or agreement shall be deemed commercially resalable,

and the repurchase of any service products shall be on a pro rata basis. Additionally, there shall be a clear description of the inventory repurchase program

in any recruiting literature or sales manual provided to participants prior to their

entry into the scheme or course of conduct, and the details of the inventory repurchase

program, including the manner in which the repurchase is exercised, shall be memorialized

in the contract that obligated participation in the scheme or course of conduct. d. Nothing in subsection a. of this section shall be construed to prohibit any scheme

or course of conduct based solely upon the fact that participants in the scheme or

course of conduct give consideration in return for the right to receive compensation

based upon purchases of goods, services, or intangible property by participants for

personal use, consumption, or resale. e. Notwithstanding the provisions of N.J.S.2C:1-8 , a conviction of leader of a pyramid promotional scheme shall not merge with the

conviction for any offense which is the object of the conspiracy. f. Nothing contained in this act shall prohibit the court from imposing an extended

term pursuant to N.J.S.2C:43-7 , nor shall this act be construed in any way to preclude or limit the prosecution

or conviction of any person for conspiracy under N.J.S.2C:5-2 or for any other offense. g. As used in this section: “ Compensation ” means payment of any money, thing of value, or financial benefit. “ Consideration ” means the payment of cash or the purchase of goods, services, or intangible property,

but does not include the purchase of goods or services furnished at cost to be used

in making sales and not for resale, or the time and effort spent in pursuit of sales

or recruiting activities. “ Financier ” means a person who, with the intent to derive a profit, provides money or credit

or other thing of value in order to finance the operations of a scheme or course of

conduct. “ Inventory ” includes both goods and services, including but not limited to promotional materials,

sales aids, and sales kits produced by or on behalf of the scheme or those engaged

in the course of conduct that are offered to participants for purchase by the scheme

or those engaged in the course of conduct. “ Inventory loading ” means actions that require or encourage participants in a scheme or course of conduct

to purchase inventory in an amount that exceeds that which a participant can reasonably

be expected to resell for ultimate consumption or, if purchased for the participant's

own use or consumption, can reasonably be expected to use or consume within a reasonable

time period.