2014 New York Laws
GBS - General Business
Article 23-A - (352 - 359-H) FRAUDULENT PRACTICES IN RESPECT TO STOCKS, BONDS AND OTHER SECURITIES
359-FFF - Chain distributor schemes prohibited.

  359-fff.  Chain  distributor  schemes  prohibited.  1.  It shall be
  illegal and prohibited for any person, partnership,  corporation,  trust
  or  association,  or any agent or employee thereof, to promote, offer or
  grant participation in a chain distributor scheme.
2. As used herein a "chain  distributor  scheme"  is  a  sales  device
  whereby  a person, upon condition that he make an investment, is granted
  a license or right to solicit or recruit for profit or economic gain one
  or more additional persons who are also granted such  license  or  right
  upon  condition  of  making an investment and may further perpetuate the
  chain of persons who  are  granted  such  license  or  right  upon  such
  condition. A limitation as to the number of persons who may participate,
  or  the presence of additional conditions affecting eligibility for such
  license or right to  recruit  or  solicit  or  the  receipt  of  profits
  therefrom,  does  not  change  the  identity  of  the  scheme as a chain
  distributor scheme. As used herein, "investment" means any  acquisition,
  for  a consideration other than personal services, of property, tangible
  or intangible, and includes  without  limitation,  franchises,  business
  opportunities and services, and any other means, medium, form or channel
  for  the transferring of funds, whether or not related to the production
  or distribution  of  goods  or  services.  It  does  not  include  sales
  demonstration  equipment  and  materials  furnished  at  cost for use in
  making sales and not for resale.
3. A chain distributor scheme shall constitute a security  within  the
  meaning of this article and shall be subject to all of the provisions of
  this article.