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David Weilbacher, Esq.
David Weilbacher, Esq., Attorney
Category: Business Law
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Experience:  Criminal & Civil Litigation, Estate Planning, Probate, and Bankruptcy
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I received a letter in the mail telling me how to make a lot

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I received a letter in the mail telling me how to make a lot of money. I just want to know if it's legal (like it claims) or a pyramid scam (which it says it's definitely not). I am to send $1.00 to each of the 6 people on the list at the end of the letter. I then wrap a dollar bill in a note saying, "Please put me on your mailing list." I then get a list of 200 names from the mailing list company that they provide (200 names for $36.00). How it works is that I'm to send out 200 letters. Of those 200, let's say 15 will respond and send me $1.00. Those 15 will each mail 200 letters and 225 will send me $1.00, etc. They claim this particular program is legal according to Title 18, Section 1302 & 1431 of the US Postal and Lottery laws. Why? He claims that in order for this to be completely legal, I must actually sell something in order to receive something in return. True or false? I have more info. for you but I'm out of space. When you E-mail me, I'll give you the rest. Thanks.
Submitted: 5 years ago.
Category: Business Law
Expert:  David Weilbacher, Esq. replied 5 years ago.
The letter you received is a scam that has been around for a long time. I suggest you save your money, and steer clear. This is nothing more than a pyramid scam.

Customer: replied 5 years ago.
David, with all due respect, my gardner could have told me it's a scam. I didn't ask if it was a scam. I asked if it was legal. I would be willing to try and lose a very small investment. That's no problem. However, I don't want to do it if it's illegal and I'm going to end up in trouble. That's the issue I need addressed. Once again, this guy claims this is legal according to Title 18, Section 1302 and 1431 of the US Postal and Lottery Laws. He says that to send a letter like this (the one I received), in order to be completely legal, I must actually sell something in order to receive something in return. So, when I send a dollar to each of the names on the list, I must include the words: "Please put me on your mailing list" and include my name and address. The item I will receive for the dollar I send to the six people is the letter. Legal?? If not, why??
Expert:  David Weilbacher, Esq. replied 5 years ago.

TITLE 18 § 1301, Mailing lottery tickets or related matter, states as follows,

“Whoever knowingly deposits in the mail, or sends or delivers by mail:

Any letter, package, postal card, or circular concerning any lottery, gift enterprise, or similar scheme offering prizes dependent in whole or in part upon lot or chance;

Any lottery ticket or part thereof, or paper, certificate, or instrument purporting to be or to represent a ticket, chance, share, or interest in or dependent upon the event of a lottery, gift enterprise, or similar scheme offering prizes dependent in whole or in part upon lot or chance;

Any check, draft, bill, money, postal note, or money order, for the purchase of any ticket or part thereof, or of any share or chance in any such lottery, gift enterprise, or scheme;

Any newspaper, circular, pamphlet, or publication of any kind containing any advertisement of any lottery, gift enterprise, or scheme of any kind offering prizes dependent in whole or in part upon lot or chance, or containing any list of the prizes drawn or awarded by means of any such lottery, gift enterprise, or scheme, whether said list contains any part or all of such prizes;

Any article described in section 1953 of this title: Shall be fined under this title or imprisoned not more than two years, or both; and for any subsequent offense shall be imprisoned not more than five years.”

Applying the above statute to your proposed endeavor, it does not appear that your letters will be a violation of the statute.

TITLE 18 § 1431 does not exist.

TITLE 18 § 1341, Frauds and swindles, states as follows,

“Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises, or to sell, dispose of, loan, exchange, alter, give away, distribute, supply, or furnish or procure for unlawful use any counterfeit or spurious coin, obligation, security, or other article, or anything represented to be or intimated or held out to be such counterfeit or spurious article, for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. If the violation affects a financial institution, such person shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.”

It does not appear that your proposed endeavor would violate this statute.

Customer: replied 5 years ago.

Okay, we're very near the end of this. I just want your personal, professional opinion on the following statement in the letter I received and then I'll click on the "accept" button. He states in the letter: "NOTE; When you send these letters, you are in the mail order business. People are sending you $1.00 to be put on your mailing list. This is a legal, helpful service." In your opinion, will that statement or claim hold up under an IRS audit (assuming I made good money and claimed it on my tax return)? By the way, if you want me to fax you the actual letter I received, just provide me a fax number and I'll get it right to you. Perhaps that would enable you to give your very best opinion on the issue of legality. I'm concerned because your initial response was that this was a pyramid scam which is illegal, right? Now your leaning toward it's not illegal?? Please clarify.

Expert:  David Weilbacher, Esq. replied 5 years ago.
Your initial question was does this activity violate the two identified statutes. If does not appear to violate 1302. The other statute, 1431, does not exist; that is not to say that it existed at one time and was subsequently repealed, it has never existed, so that is an indication of the exhaustive research the promoter of this program.

The IRS has one simple overriding rule; if you make money, report it and pay taxes on it. The IRS does not care about the source of the revenue. If you make money in this endeavor, report the income, pay the taxes, and you will not have a problem with the IRS.

The reason other multi level/pyramid organization such as Amway, Tupperware, etc. are not illegal pyramid scheme is that there is something of "value" exchanged with the lower levels for their money, i.e. the products. It is not the case of money going up th pyramid and never coming down. Now, if being put on your "mailing list" is of value to someone it will prevent this program from being an illegal pyramid.

I can make you no guarantees that you will not be prosecuted for operating a program such as this. No attorney can; just as no attorney can prevent you from being sued, all any attorney can do is defend you if you are charged with a crime or sued. In this matter, not only are you dealing with the United States Code, but you are also dealing with the statutes in every state you were to mail to, as well as city ordinances for some of the larger cities. So in short it is impossible to give you any certainty without doing months of research.

I can tell you that it does not appear to violate 1302, but that is as far as I am willing to go.

David Weilbacher, Esq., Attorney
Category: Business Law
Satisfied Customers: 335
Experience: Criminal & Civil Litigation, Estate Planning, Probate, and Bankruptcy
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