MLM & Pyramid Scheme Lawyer

Key laws & sections

• Prize Chits and Money Circulation Schemes (Banning) Act, 1978

  The principal anti-MLM statute. Section 3 bans “money circulation schemes”; Section 4 makes promotion / participation an offence with up to 3 years imprisonment.

• Bharatiya Nyaya Sanhita — Sections 318 & 316

  Cheating and criminal breach of trust — the standard layered charges in any MLM FIR alongside the PCMCS Act.

• Prevention of Money Laundering Act, 2002

  PCMCS Act offences are scheduled offences under PMLA Schedule, Part B. Brings ED jurisdiction, attachment of promoter assets, and Section 50 summons machinery.

• Banning of Unregulated Deposit Schemes Act, 2019 (BUDS Act)

  Where the scheme involved deposit-taking without regulator approval, BUDS Act parallel charges trigger — including Schedule attachment of properties for restitution.

• Direct Selling Guidelines, 2021

  The Consumer Affairs Ministry’s framework distinguishing legitimate direct-selling from pyramid scheme — turnover-from-product-sale vs turnover-from-recruitment is the dividing line we argue.

How we run the matter

1. 1
   Investor or agent — single-side intake

   Conflict checks first. Investor matters and accused-agent matters in the same scheme are handled in different verticals; no overlap. We map the client’s exact role in the scheme — investor only, downline recruiter, mid-level promoter, national leadership.

2. 2
   Investor recovery — group representation

   Where investor losses are large enough, we file consolidated complaints with EOW / cyber cell and parallel applications for inclusion in any ED attachment / BUDS Act restitution proceedings. Recovery is partial, asset-dependent and slow but real.

3. 3
   Defence for low-level distributors

   For distributors pulled in only because their UPI / bank account received commissions, we file anticipatory bail under Section 482 BNSS, distinguish the client’s role from the scheme leadership, and pursue Section 528 BNSS quashing where the FIR fails to disclose any direct cheating role.

4. 4
   ED defence

   Section 50 PMLA summons attended with counsel; PAO under Section 5 PMLA contested before the Adjudicating Authority; appeal to the Tribunal under Section 26 where attachment is confirmed against innocent downline assets.

5. 5
   BUDS / restitution claims

   Where the matter falls under the BUDS Act, we file restitution claims for investor clients before the Designated Court — proportionate distribution from sale of attached promoter assets.

Why Shield for this

• MLM-specialist intake protocol. Within the first sitting we can place a client into one of three roles — pure investor, downline distributor, or active promoter. The defence (or recovery) strategy differs sharply for each, and matter outcomes depend on getting that classification right at day one.
• Recovery via attachment claims. Recent matter — group of investors in a collapsed crypto-MLM where the EOW had attached two Delhi properties of the lead promoter. We filed consolidated restitution claims; on sale and distribution, our clients recovered a significant proportion of principal, ahead of unrepresented investors.
• Distributor defence at the bail stage. A school teacher named in a 18,000-name MLM FIR purely because her UPI received ₹2.4 lakh in commissions — anticipatory bail granted at first hearing with role distinction argued; matter proceeding to discharge.
• Realistic counsel. We tell investor clients the truth about recovery probabilities upfront — typically partial, sometimes zero, and almost never fast. We don’t take retainers on promises we cannot keep.

Questions clients ask first