June 21, 2001
Contact: Lucas Hamilton
Judge upholds State Auditor's actions against pyramid scheme
District Court Judge Thomas Honzel upheld the constitutionality of the statute defining a pyramid scheme Wednesday, substantiating the authority of the State Auditor's Office to pursue so-called gifting programs as pyramid schemes.
The State Auditor, as Commissioner of Securities had filed an agency action against Connie Anders in September 2000 alleging that she had violated Montana Securities code by operating a "gifting program," which was, in fact, a prohibited pyramid promotional scheme.
Anders had stayed the agency action in order to seek a declaratory ruling from the district court on whether the pyramid scheme statutes were unconstitutionally vague.
The district court rejected Anders claims and remanded the case back for a hearing, stating that the pyramid scheme statute was not vague because in it "the phrase 'sales plan or operation' employs terms of common usage which should be readily understood by a person of average intelligence.
If you would like to interview State Auditor John Morrison about the decision or learn more about pyramid schemes, please call Jill Gerdrum in the morning at 444-3152 or Wendy Raney after 1 p.m. at 444-2495.
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