U.S. v. Gold Unlimited
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U.S. v. Gold Unlimited
Case: U.S. v. Gold Unlimited (1999)
Subject Category: Pyramid
Agency Involved: U.S. Attorney General
Court: Sixth Circuit Court of Appeals
District Court unavailable.
Case Synopsis: The Sixth Circuit was asked to decide if the instructions presented to the jury properly
instructed them on the fraudulent nature of a pyramid scheme
Legal Issue: Does the operation of a pyramid scheme necessarily involve fraudulent activity?
Court Ruling: The Circuit Court held that the jury instructions tying a pyramid scheme and fraud were
proper. Gold Unlimited sold "shares" in gold bars. A member could earn more gold by recruiting
additional members to buy shares. The owners, along with the company, were charged with the
promotion of an illegal pyramid scheme, mail fraud, and other associated crimes. The owners were
convicted, but fled before they were to report to prison. The company appealed, claiming that the jury
instructions were prejudicial by implying that if the company operated a pyramid scheme, then it
intended to defraud the public. Gold claimed that such an instruction did not require the jury to find
intent to defraud on the part of the company, only that it operated a pyramid scheme. The Circuit Court
disagreed, ruling that the government would still have to prove intent to operate a pyramid scheme.
Because a pyramid scheme was inherently fraudulent, the Government need not prove intent to
defraud and intent to operate a pyramid scheme separately.
Practical Importance to Business of MLM/Direct Sales/Direct Selling/Network Marketing/Party
Plan/Multilevel Marketing: A pyramid scheme is inherently fraudulent under current law. Intent to
operate such a scheme is intent to defraud.
U.S. v. Gold Unlimited , 177 F.3d 472 (1999) : The Circuit Court held that the jury instructions
tying a pyramid scheme and fraud were proper. Gold Unlimited sold "shares" in gold bars. A member
could earn more gold by recruiting additional members to buy shares. The owners, along with the
company, were charged with the promotion of an illegal pyramid scheme, mail fraud, and other
associated crimes. The owners were convicted, but fled before they were to report to prison. The
company appealed, claiming that the jury instructions were prejudicial by implying that if the company
operated a pyramid scheme, then it intended to defraud the public. Gold claimed that such an
instruction did not require the jury to find intent to defraud on the part of the company, only that it
operated a pyramid scheme. The Circuit Court disagreed, ruling that the government would still have to
prove intent to operate a pyramid scheme. Because a pyramid scheme was inherently fraudulent, the
Government need not prove intent to defraud and intent to operate a pyramid scheme separately.
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177 F.3d 472 (1999)
UNITED STATES of America, Plaintiff-Appellee,
v.
GOLD UNLIMITED, INC., Defendant-Appellant.
No. 96-6713.
United States Court of Appeals, Sixth Circuit.
Argued December 10, 1998.
Decided and Filed May 13, 1999.
John D. Cline (argued and briefed), Freedman, Boyd, Daniels, Hollander, Goldberg & Cline, Albuquerque,
New Mexico, Michael A. Valenti (briefed), Zoppoth, Valenti & Hanley, Louisville, Kentucky, for Appellant.
