Huge pyramid scheme cracked in Guangxi

Updated: 2012-04-12 17:14


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Police said on Wednesday that they cracked the largest pyramid scheme in South China's Guangxi Zhuang autonomous region, according to a report in People's Daily.

Pyramid schemes are an illegal type of network marketing in which recruits pay an admission fee to join the scheme, then earn commissions by persuading other people to join, with little or no product or profits exchanged. The network is built like a pyramid as the lower recruits are controlled by the upper.

Nanning police, who are in charge of the case, have detained hundreds of suspects so far but believe thousands are involved in the "super marketing network."

The preliminary investigation showed thousands of personnel are from Anhui, Sichuan, Shandong, Gansu and other provinces, involving hundreds of millions of yuan.

"The cheating method of this crime was tempting recruits by the fake promise of profit return. The member has to invest a certain amount of money in capital, and meanwhile recruit another three new members. With the incredible increase in the selling group scale, some upper members could become multimillionaires," said Meng Jing, head of the economic crime detection team at Nanning police station.

Deputy chief of Nanning police station Lv Wen said the pyramid retailers took advantage of the national development strategy of Beibu Gulf Economic Zone and China-ASEAN Free Trade Area, to recruit new members.

"They invited their relatives and friends to investigate the market, and asked for property investments, then lied about a huge fortune overnight to attract recruits," Lv added.

"The pyramid scheme in Guangxi has been updated now to seem more fascinating and deceptive," said Li Xu, president of the China Anti-Pyramid Association.