Difficulties in the Legal Qualification of Fraud: Financial Pyramids and Multi-Level Marketing

Gabbassali, Botagoz
Kaliyev, Askar
Tokubayev, Kuandyk
Khanov, Talgat
Biyekenov, Nurlan
Karipova, Assel

Jurnal Cita Hukum
Vol. 13 No. 3 (2025): Winter Edition (In Press)

This article examines the legal challenges in identifying two types of schemes: classic financial pyramids and commodity financial pyramids. A comparative-legal analysis shows that financial pyramids are often disguised as legitimate businesses, namely, multi-level marketing. The study focuses on describing the differences between lawful multi-level marketing practices and illegal pyramids based on such criteria as misleading investment offers, the lack of economic value creation, and the continuous need to attract new investors. The results indicate that current legislation in many jurisdictions lacks uniform standards for defining and prosecuting financial pyramids, which often leads to difficulties in the legal qualification of criminal offenses