Webster

We consider what constitutes an inherently fraudulent pyramid scheme for purposes of several federal antifraud statutes.

Shaun Webster and Robert Ligón represent a class of participants (collectively ‘Webster”) in a “multi level marketing” pro *780 gram promoted by Omnitrition International, Inc. (“Omnitrition”). Webster alleges that Omnitrition, Roger Daley, Charles Ragus, James Fobair and Jerry Rubin operated an inherently fraudulent pyramid scheme under both California and federal law. Webster amended the complaint to add as defendants Omnitrition’s outside counsel, Douglas Adkins, and his law firm, Gardere & Wynne, L.L.P. (collectively “Attorney Defendants”).

The district court granted summary judgment in favor of all defendants, holding that Omnitrition’s program was not a pyramid scheme as a matter of law. The court also held that the federal securities claims against the Attorney Defendants were barred by the statute of limitations.

Webster appeals, claiming that there are disputed issues of material fact as well as errors of law. We have jurisdiction and we affirm in part and reverse in part.

I

Omnitrition is a corporation which operates a “multi level marketing”…