California · Penal Code

PEN §327: Every person who contrives, prepares, sets up, proposes, or operates any endless chain is guilty of a public offense, and is punishable by imprisonment in the county jail not exceeding one year or in

Felony

What this law says, in plain English

Operating an endless chain scheme (where participants pay for the chance to earn money by recruiting others) is a criminal offense punishable by up to one year in county jail or 16 months to three years in state prison.

Read the full statutory text

Every person who contrives, prepares, sets up, proposes, or operates any endless chain is guilty of a public offense, and is punishable by imprisonment in the county jail not exceeding one year or in state prison for 16 months, two, or three years. As used in this section, an “endless chain” means any scheme for the disposal or distribution of property whereby a participant pays a valuable consideration for the chance to receive compensation for introducing one or more additional persons into participation in the scheme or for the chance to receive compensation when a person introduced by the participant introduces a new participant. Compensation, as used in this section, does not mean or include payment based upon sales made to persons who are not participants in the scheme and who are not purchasing in order to participate in the scheme.

Verify at the official source: California legislative text

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This page is legal information, not legal advice. Code text is sourced from official publications and may lag amendments — always confirm at the official source linked above. Plain-English summaries and relationship data are AI-derived and reviewed on an ongoing basis; verify with a licensed attorney before acting.