China's largest ever pyramid-selling prosecution case has begun in a court in Zhejiang province.

The alleged scheme, managed through a shopping website based in Jinhua, is believed to involve not only the largest ever amount of money in such a case, but also the most people.

Prosecutors claim the suspected website, www.wjgw.com, had been convincing netizens of guaranteed refunds after shopping online since its establishment in 2010.

It was closed down in June 2012, owing refunds worth 24.04 billion yuan ($3.9 billion) to a total of 1.9 million customers or members in 31 provinces, autonomous regions and municipalities.

Fifteen senior executives of the Zhejiang Yijia E-commerce Company, the company that created the site, have attended the hearing.

Ying Jiancheng, its chairman, has denied that the website was related to any pyramid selling and has claimed that if it had not been closed down, it would by now have grown larger than jd.com, one of China's largest online shopping websites.

According to procurators from Wucheng district in Jinhua, the company had been attracting members by offering a 500 yuan refund for every 500 yuan spent on the site - effectively offering its members savings equal to their spending, they said.

The website also required its members to attract lower-level members and take part in franchising activities.

Each member was ranked and the cash incentives for higher-ranking members depended on how many new members they signed up.

Between July 2010 and June 2012, the website registered 1.9 million members and more than 100,000 franchisees.

Senior executives made handsome earnings from the venture. Ying alone had received payments of 3.74 million yuan, the court said.

Kang Liangdong, a lawyer from Xinli Law Firm in Shenzhen, Guangdong province, said the scheme had been disguised as e-shopping, but the method of pyramid selling remained the same as those used by previous multiple-level sales groups.

Procurators told the court the fact that the company was pyramid selling was undeniable, and its senior executives should be punished.

According to Chinese law, people convicted of pyramid selling can be imprisoned for up to five years and fined. In particularly serious cases, sentences of more than five years can be handed down.

"China's criminal code embodies a principle of tempering justice with mercy, and that is also the case in the crime of pyramid selling," said Kang.

"Those who organize these illegal sales are usually punished with both imprisonment and fines, while the minor offenders face fines and education."

Contact the writers at yanyiqi@chinadaily.com.cn and zhaoyinan@chinadaily.com.cn

(China Daily USA 06/19/2013 page6)