Beijing cracks largest-ever pyramid selling case

Beijing has cracked the city's biggest-ever pyramid selling case, involving more than 1.6 billion yuan (206 million U.S. dollars) of illicit gains, according to the Beijing Municipal Public Security Bureau.

The Yilin Wood Company swindled more than 20,000 people all over the country, including 17,000 in Beijing, since April 2004, said Fu Zhenghua, deputy director of the bureau.

Police evidence shows the company cheated investors by promising them high returns on sales of woodland. It used a pyramid selling model, in which one salesperson recruits other sales people and they in turn recruit more, according to the bureau.

Even though pyramid selling is accepted in some countries, it was banned in China by a cabinet regulation in 1998. Authorities said such schemes have become a synonym for cheating and hoodwinking in China.

The Beijing police have arrested 18 people on criminal charge and seized or frozen part of the company's assets and illicit gains, said the bureau. The company's operating unit in Beijing closed down on Thursday.

The police are hunting other high-ranking members of the selling scheme around the country and trying to recover investors' losses as far as possible, said Fu.

People guilty of organizing and running pyramid schemes involving a large number of people face prison terms of five years or more and can be ordered to repay up to five times the profits generated by their illegal business operations, according to Chinese law.

Source: Xinhua