Actually it's a Felony, I looked it up.
Any form of "ponzi" or pyramid scheme is, not to mention doing it via the net is considered spamming and a violation of the service agreement of most providers.
The only state this is even quasi-legal in, would be wisconsin - where every "multilevel marketing" company seems to operate from, since no other state will allow such a practice to be based on their turf.
I'd advise checking the laws on this before attempting it - and doing a little research into a man named charles ponzi.
-Ree