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Ely
Ely, Counselor at Law
Category: Criminal Law
Satisfied Customers: 85134
Experience:  Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
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Hi,We deal with MLM Software and found that many of out

Resolved Question:

Hi,

We deal with MLM Software and found that many of out clients end up running a Ponzi scheme, they collect some money and then wind up after some time. At software level there is nothing that we can do to prevent such people. For legal MLM and illegal ponzi both sell "product". Whether "Product" is real product/ service or not, it cannot be determined by software. We are putting enough terms & conditions to keep us protected. We believe this is like selling kitchen knife that has useful purpose and seller cannot be held responsible if someone uses the knife to cause physical hurt to others, one who caused physical hurt is responsible not seller. So far we have not approached authorities with details of those whom we think were running ponzi like scheme and suddenly winded up leaving their investors uninformed. Some clients even ask us to buy domain on their behalf and go for private domain registration. Money is collected from several countries, in most cases outside of the country where we operate from. Our contracts carry data privacy clauses and we cannot just name anyone as it could back fire and put us in legal soup.

We cannot quit this line so easily as have already given several years to it and have substantial intellectual property rights & experience build up. Its earning us decent money and besides field is legal with so many good clients running perfectly legitimate MLM business using our software.

We are concerned for investors as good human being. What our approach should be?
Submitted: 1 year ago.
Category: Criminal Law
Expert:  William B. Esq. replied 1 year ago.

William B. Esq. :

Dear Customer, Thank you for using Just Answer, we appreciate your business. I would like to help you today, but I want to check to ensure that I am the right person to answer your question. It appears you already feel comfortable with your position regarding any liability you might have, but you are asking about ways you can legally be more aggressive in screening potential clients or purchasers, is that correct?

JACUSTOMER-4pg4ubgu- :

Thanks for your response. I am not fully comfortable, I still have some concerns whether am I fully protected or I can be in legal problem in case later someone finds that specific ponzi website was actually developed and maintained by us? Its not possible for us to screen before our client purchase our software, in most cases its after the product is sold we get to know that their compensation plan appears to be more like ponzi. What can we do for existing client who appears to be running ponzi scheme?

William B. Esq. :

Okay, what I am going to do is to list the question as "mis-categorized" and send it to our Criminal Law experts. They will better be able to help you with these issues than I. There might be a delay in the next expert picking the question up, but the clarification should help. You do not need to respond, the server picks these up quickly. Best regards, Bill

JACUSTOMER-4pg4ubgu- :

Thanks Bill, awaiting another expert to pick up the thread.

Expert:  wendy-Mod replied 1 year ago.

Hi, I am a moderator for this topic. It seems the professional has left this conversation. This happens occasionally, and it's usually because the professional thinks that someone else might be a better match for your question. I've been working hard to find a new professional to assist you right away, but sometimes finding the right professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you.

Thank you!
Wendy

Customer: replied 1 year ago.

Hi Wendy,


 


Its fine for me to wait for some time. Looking forward to receiving feedback from your expert.


 


Thanks

Expert:  Fran-mod replied 1 year ago.
Thank you for your patience, your business is very important to us, we are waiting on a professional with the right professionalise to come online. Feel free to let us know if you would like us to continue searching for a professional or if you would like us to close your question. Thank you for your understanding!
Expert:  Ely replied 1 year ago.
Hello, my name is Ely. Welcome to JustAnswer. Please note: (1) this is general information only, not legal advice; and (2) my function is to give you honest information and not necessarily to tell you what you wish to hear. Note: there may be a slight delay between your follow ups and my replies.

What our approach should be?

I am very sorry for your situation. This is rather a very open-ended question. Let me ask this - what are you trying to achieve here? Are you asking how you can force your clients to act reasonably and not to "dupe" anyone else while using your company's name?

This is not an answer, but an Information Request. I need this information to answer your question. Please reply, so I can answer your question. Thank you in advance.
Customer: replied 1 year ago.

Hi,


 


Sorry for the delayed response. I need to be sure that legally we are protected even if our client is convicted for running a ponzi scheme. I need your opinion on this.We never get involved in managing operations and never have any cuts on actual turn-over of the company. We sell our software at flat one time prices and services at flat maintenance charges.


 


Secondly how we can be sure that any client who uses our company name to acquire domain names or hosting facilities do act reasonably, and what our course of action should be in case we do find that some of our client is duping people. We cannot take their website offline just because we feel that they are running a ponzi scheme.


 


In some cases our client do wind up company after running it for sometime. They would have collected some money and then run away or simply launch another company in another region. Investors who joined recently loose their all or most of the investment. Investors file police complaints and then investigation starts. Should we approach authorities and provide all details of owners of the company on our own or wait for the authorities to reach us and inquire about owners?


 


Thanks.

Expert:  Ely replied 1 year ago.
Friend,

Thank you for your response. I am currently away from the site but I will respond in under two hours. My apologies in advance for the wait...
Expert:  Ely replied 1 year ago.
Friend,

My apologies for the wait.

Sorry for the delayed response. I need to be sure that legally we are protected even if our client is convicted for running a ponzi scheme. I need your opinion on this.We never get involved in managing operations and never have any cuts on actual turn-over of the company. We sell our software at flat one time prices and services at flat maintenance charges.

Well, there is 'silver bullet' to doing this. Even if you have nothing to do with it, MLM companies are automatically suspect due to the very nature of the set up.

The best way to avoid this is to have any client sign an agreement that states in part that they are acting COMPLETELY INDEPENDENTLY. This will at least attempt to show any authorities that you attempted to distance yourself from them if they do something bad.

Secondly how we can be sure that any client who uses our company name to acquire domain names or hosting facilities do act reasonably, and what our course of action should be in case we do find that some of our client is duping people. We cannot take their website offline just because we feel that they are running a ponzi scheme.

Parties in your situation may wish to put into agreement that ANY website set up must be pre-approved by you, and, any major changes to that site must also be pre-approved by you. This may be included in the contract. Nothing states that this cannot be done.

If there is already an existing website up and running that is operating like a ponzi scheme, then one may demand its shutting down, or else break contract for cause with the clients behind it. "We cannot take their website offline just because we feel that they are running a ponzi scheme." Actually, you can. Rather, you can cut them off, citing (if signed) the clause, and (if not signed) that they are engaged in illegal activities that make the contract void. If they do not take off the website, one can force it down by court order.

In some cases our client do wind up company after running it for sometime. They would have collected some money and then run away or simply launch another company in another region. Investors who joined recently loose their all or most of the investment. Investors file police complaints and then investigation starts. Should we approach authorities and provide all details of owners of the company on our own or wait for the authorities to reach us and inquire about owners?

The answer is YES, but, via counsel. This is because without an attorney, you may accidentally state something that may be used against you. With an attorney, any statement/information passed on by you to the authorities though the attorneys is controlled. This may also help to earn your company the belief of the authorities that you really do not have anything to do with clients who begin using the MLM software as a ponzi scheme.

IMPORTANT: Please use REPLY button to keep chatting, or RATE my answer when we are finished. Kindly rate my answer as one of the top three faces before submitting the rating, because this is how I get credit for my time with you. Rating my answer the bottom two faces does not give me credit and reflects negatively on me as an expert, even if my answer is correct. I work very hard to formulate an informative and honest answer for you; please reciprocate my good faith. Do not worry, you may always ask follow ups free after rating. My ultimate goal is your complete satisfaction.
Ely, Counselor at Law
Category: Criminal Law
Satisfied Customers: 85134
Experience: Private practice with focus on family, criminal, PI, consumer protection, and business consultation.
Ely and 9 other Criminal Law Specialists are ready to help you
Customer: replied 1 year ago.

Thanks for your feedback.


 


We do have clauses in our contract that distance ourselves from their operations and classify our services as vendor services providing them IT facilities only. I believe its time we add additional clauses that would allow us to withdraw our services/ discharge them in case they get into ponzi activities and give us freedom to approach authorities on our own and provide necessary details. Thanks!

Expert:  Ely replied 1 year ago.
You are very welcome. Good luck, and please don't forget to rate my answer in one of top three faces and then SUBMIT – it is the only way I get credit for my time with you – or, please REPLY to keep on chatting – I want you to be satisfied.

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