Man sentenced to 15 years for pyramid scheme
Xinhua, August 7, 2013
A man was sentenced to 15 years in prison for organizing an online pyramid scheme that involved 24 billion yuan (3.9 billion U.S. dollars), according to a ruling passed down by a court in east China's Zhejiang Province on Wednesday.
A court in the Wucheng District of the city of Jinhua found Ying Jiancheng guilty of both assault and organizing a pyramid scheme. Ying was also fined 2 million yuan, according to the court verdict.
The pyramid scheme was based around shopping website Wanjia Gouwu. The website initially offered discounts to consumers on purchases made through the website. However, the website later asked consumers to buy products at a discount while promising refunds based on the full retail value of the products over time.
Using this trick, the company recruited more than 1.9 million members across China, leaving it unable honor its commitment to give members full refunds on their purchases.
The outstanding debt for members of the website stood at 773 million yuan as of June 11, 2012, the day the website was shut down by police, according to an investigation.
Pyramid schemes are banned in China but remain rife in many less-developed regions. In recent years, the fraud has evolved from sales of fake products to more sophisticated fund-raising chicanery and has also been extended to the Internet. Recent reports have also cited a rising number of college graduates falling victim to such scams.
