Chinese authorities actively crack down on pyramid schemes.
One of China’s most notorious pyramid schemes is the 1040 Sunshine Project, a sprawling multi-level marketing scam that became particularly associated with Guangxi, including the cities of Beihai and Nanning.
It lured participants with promises of extraordinarily high returns and operated under a system known as “five levels and three promotions”.
The system refers to the hierarchical structure used by pyramid schemes to organise its members. Levels are determined by the total number of shares purchased by the individuals and the members they recruited.
Members were reported to have been active in Nanning, Wuhan, Hefei and Guiyang from 2007, and variants of the scheme subsequently appeared in numerous parts of China.
Other notable cases have also emerged over the years.
The founder of a local traditional Chinese medicine firm was jailed in 2020 for running a pyramid scheme.
Shu Yuhui, founder and chairman of Quanjian Nature Medicine Technology Development, was sentenced to nine years in prison and fined 50 million yuan. The company was fined 100 million yuan.
The company was found to have lured victims with large-value rewards into buying overpriced products, becoming the company’s members and recruiting more people into the business since 2007, said the People’s Court of Wuqing District of Tianjin.
A seven-year-old girl named Zhou Yang had died in December 2015 after taking medicine from Quanjian that claimed to have anti-cancer effects, local media reported.
The company was then investigated for exaggerated advertising and the case also came under police investigation.
Another case in 2018 saw a businessman being jailed and fined for running a multi-billion yuan pyramid scheme and inciting a rare street protest in Beijing against police investigations into his activities.
Zhang Tianming was jailed 17 years and fined 100 million yuan after he used social media to organise a public protest involving more than 600 people from his marketing platform, according to Chinese state media reports.
Zhang and nine other staff from his company, Shenzhen-based Shan Xin Hui, were found guilty of running a multi-level marketing company and of disturbing social order.
The company had lured investors with promises of high rates of return on projects that were meant to help the poor, but had instead paid out early members purely using funds from new joiners, a court investigation found.
Nearly six million people and over 100 billion yuan were involved in the scheme, the court said.
Additional reporting by Lakeisha Leo
Read the full article here
