By tf-lawyer.com On October 25, a spokesperson from the Ministry of Public Security shared new updates regarding recent crackdowns on pyramid scheme crimes across China. Since the launch of this special operation, police have focused on innovative internet pyramid schemes that involve new technologies, industries, and business models, alongside traditional schemes that combine online and offline tactics and target significant public welfare issues. The authorities have successfully dismantled several major organizations and captured numerous suspects, decisively curbing the spread of these crimes. Today, five notable cases of pyramid scheme activities were made public.
**1. Case of He from Shanghai**
In September 2023, the Minhang District Police in Shanghai opened a case against He, who was suspected of organizing and leading pyramid scheme activities. Investigators found that He operated through a Mongolian agricultural tech company, entering into oat purchasing contracts with local farmers. Under the guise of “order agriculture” and promoting themes like “poverty alleviation” and “health management,” the scheme required participants to buy packages to qualify for recruitment and development of recruits. The group lured farmers into signing contracts for excessive amounts of agricultural products, establishing multiple membership tiers with promises of points and high returns, including initial shares from a potential overseas listing. By the time of the bust, over 10,000 members had joined, involving around $520 million in funds. In October 2023, law enforcement executed a coordinated raid, arresting He and over ten accomplices. By June 2024, an expanded nationwide operation led to the capture of over 30 additional suspects, with investigations ongoing.
**2. Case of Cui from Henan**
In July 2023, the Huai Bin County Police in Henan initiated an investigation into Cui and others for similar offenses. The group formed multiple shell companies, including one from Hainan, to establish a jade trading platform with multiple high-return models as bait. They attracted participants through word-of-mouth and social media, encouraging them to recruit others. The pyramid scheme successfully drew in over 11,000 members and involved about $380 million. Authorities detained several key suspects, including Cui, in July 2023. By May 2024, further operations led to a significant number of arrests nationwide, and investigations are still active.
**3. Case of Li from Guangdong**
In October 2023, the police in Deqing County, Guangdong, launched a case against Li and others suspected of running a pyramid scheme. Since August 2022, Li’s group had started a media company and developed apps claiming participants could make money simply by chatting and watching videos. They charged fees, established membership levels, and offered high returns based on future company stock options luring individuals to become members and recruit others. The operation amassed over 1.95 million members, soliciting about $4.35 billion. By January 2024, 13 suspects, including Li, were apprehended, and in June, a significant nationwide operation led to the arrest of over a hundred more suspects, with investigations continuing.
**4. Case of Wang from Guangxi**
In March 2024, police in Yulin, Guangxi, began an investigation into Wang and his associates for similar charges. They founded an environmental tech company in Chengdu and marketed a “green old clothes recycling” investment project, appealing to potential recruits with high promised returns for purchasing self-service recycling machines. Their operation attracted over 39,000 members and involved around $572 million. By August 2024, a national operation led to the arrest of over 30 suspects, with ongoing investigations.
**5. Case of Liao from Yunnan**
In June 2023, the police in Kunming’s Dongchuan District investigated Liao and his group for pyramid scheme activities. Claiming to support national poverty alleviation initiatives, they used appealing themes such as the “Chinese Dream” and space exploration to promote their app for purchasing shares in poverty alleviation projects, offering rewards and dividends. Members would recruit others, forming a hierarchical structure based on investments from those lower in the pyramid. The scheme grew to include 1.26 million members, involving $560 million. Key suspects, including Liao, were arrested in July 2023, and a nationwide crackdown in April 2024 saw nearly 100 more arrests, with ongoing investigations.
These cases illustrate the ongoing efforts by law enforcement to combat pyramid schemes, highlighting the challenges and complexities associated with modern fraudulent activities.
