## Facts

- Cochran attended a meeting arranged by Dellfava to recruit participants into an “airplane game,” a chain distribution/pyramid scheme in which payouts to those at the top depended on payments from new entrants.
- The structure required a participant to pay money to enter and then solicit others who would also pay, with the “pilot” receiving the largest payout.
- Cochran knew the scheme was illegal but paid $2,200 to join after Dellfava urged her to participate; Dellfava forwarded the money to the scheme’s “pilot.”
- After the scheme collapsed before Cochran recouped any money, she demanded the return of her $2,200; Dellfava and others refused.
- Cochran sued Dellfava seeking restitution of the $2,200 on the theory that he induced her participation.

## Issues

1. Whether a knowing participant in an illegal chain distribution scheme may maintain a civil action to recover money paid into the scheme when recovery depends on the court’s involvement in an illegal transaction.
2. Whether the plaintiff could avoid the illegality bar by claiming the parties were not in pari delicto because the defendant persuaded her to join.

## Decision

- The court dismissed the action and entered judgment for Dellfava.
- The court held the “airplane game” was a prohibited chain distribution scheme under New York General Business Law § 359-fff.
- The court concluded Cochran, by investing with knowledge of the scheme’s illegality and seeking to profit from it, was in pari delicto and could not obtain judicial relief.

## Legal Principles

- Courts will not grant relief where the plaintiff’s claim requires proof of the plaintiff’s own illegal conduct or relies on an illegal contract or arrangement.
- Participation in a chain distribution scheme prohibited by statute bars a participant from using civil litigation to reallocate losses among participants.
- The in pari delicto doctrine prevents recovery between wrongdoers who are substantially equally culpable; limited exceptions may apply where the plaintiff acted under duress, undue influence, or similar circumstances showing materially lesser fault.
- A plaintiff who knowingly joins an illegal pyramid scheme for profit is not entitled to restitution from another participant who encouraged the participation.

## Conclusion

The court refused to assist a knowing participant in an illegal pyramid scheme in recovering her investment, holding that illegality and in pari delicto barred relief because the plaintiff sought profit from the unlawful enterprise and was not materially less culpable than the defendant.


Cochran v. Dellfava, 517 N.Y.S.2d 854 (N.Y. City Ct. 1987)