More than 5,000 companies are facing bankruptcy in the U.S. as a result of a multi-million dollar fraud involving the recruitment of young people and selling them products and services, according to a new study.
The study, which was released Thursday by the Institute for Justice and Economic Research, found that at least 1,200 businesses have lost money and that another 1,400 are still under investigation.
It found that the fraud is costing the U,S.
economy about $9 billion per year in lost sales, income and profits.
The research found that nearly all of the businesses are in the business of marketing products or services.
About half of the companies that were shut down are in MLMs, a pyramid scheme where companies sell products or products that have little or no benefits to consumers.
More than 2,200 MLMs were found in the study, representing about 4 percent of the MLM industry.
The number of MLMs in the United States grew from about 2.2 million in 2009 to more than 3.4 million in 2016, the report said.
It is not known how many people are being recruited into MLMs or how many companies are actually being investigated.
In all, 1,056 companies have been shut down or are in financial distress.
MLM scams have been tied to other crimes including drug trafficking, money laundering and credit card fraud.
MLMs are illegal in every state.
The IRS has a web site that offers a checklist of tips for businesses and consumers on how to detect MLMs.