What is a Pyramid/Ponzi Scheme?

There are, in fact, quite a few articles that differenciate legal MLMs from such money games.

I'll link one of them here:

http://www.marketwaveinc.com/articles/Pyramid.asp

I would also like to highlight one portion of another article, which is basically a case study:

"1991: Cooper is the National Director of Training for American Gold Eagle, a gold coin MLM, and one of the early pioneers of the binary compensation plan. AGE is eventually shut down for securities and pyramid violations (they claimed the Gold Eagle coins were a great "investment"). The pyramid label was due mainly to AGE reps buying product solely to acquire additional income positions in the compensation plan (the emphasis was on recruitment, not actual sales of the products - keep that in mind for later)."

Sounds familiar to some of you?

Here's the link:

http://www.marketwaveinc.com/articles/TTP.asp

With so many companies nowadays coming up with smarter ways to work around rules that instantly qualify them as an illegal operation, we, as potential business builders, must have due diligence in making sure thatour choices don't burn us in the future.

P.S. To those in Sunshine Empire, start thinking long term. Such companies have been around since the early 1900s and are generally called 'Ponzi Schemes'. So thread lightly, and carry a big gun (hehehe)

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Update 29/10/07

Here are some more links with regards to pyramids, ponzis and legal MLMs

http://www.sec.gov/answers/pyramid.htm
http://www.ftc.gov/bcp/conline/pubs/alerts/pyrdalrt.shtm
http://www.ftc.gov/bcp/conline/pubs/alerts/lotionalrt.shtm