Legal Question in Tax Law in Massachusetts

Matrix programs

Are matrix programs legal? Of those I have seen, they work in similar ways. You purchase a set of e-books for an amount that corresponds to the ''gift'' product you wish to receive, which consist of consumer elecronics ranging from a Playstation to a Plasma TV. Depending upon the product, a certain number of people are required to jin the matrix after you in order for you to receive your gift (or cash equivalent). You can refer but do not have to. They are then in line for their gift as well. Whether it works or not is irrelevant to me now- I want to know if it is legal to receive the gifts or cash equivalent, and if so, how to report it, or if it considered gambling or a pyramid scheme. Thanks.


Asked on 2/11/03, 9:43 am

1 Answer from Attorneys
Burton Haynes Burton J. Haynes, P.C.

Re: Matrix programs

One of the best sources for information on every kind of scam, ponzi scheme and con game known to man is www.quatloos.com. Within that site you will find information on your "matrix" type schemes, and multilevel marketing scams in general (www.quatloos.com/mlm/mlm.htm). See in particular the link on quatloos to www.worldwidescam.com/pmatrix.htm.

Anything you get by participating in one of these schemes (don't hold your breath) is taxable income. The use of the term "gift" is a ruse. You have no sense of detached generosity to anyone who would get a piece of your money, nor do they have any such sense of generosity towards you. It is income, pure and simple. And if you lose money, which you will, the IRS could very well challenge your efforts to deduct the loss because the transaction was not entered into with a reasonable expectation of profit. Best advice: Don't waste your time or money. Leave the scam artists alone. You can't win at their game, and the government will not willingly subsidize your losses.

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Answered on 2/11/03, 10:07 am


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