China arrested more than 16,000 people suspected of involvement in pyramid selling in 2006, according to the Chinese Ministry of Public Security (MPS) in Beijing on Tuesday.

The MPS said funds of 663 million yuan (87.3 million U.S. dollars) -- relating to 1,915 pyramid selling cases -- had been frozen.

In 2006, China investigated a total of 2,081 pyramid selling cases with over 10 billion yuan involved.

MPS officials urged local public security departments to differentiate ringleaders from victims when investigating pyramid selling cases.

In a high-profile case, police last week arrested two women -- Liu Liping and Zhao Yuping -- involved in Beijing's largest pyramid selling scheme.

The company cheated investors by promising high returns on sales of forest land. It used a pyramid selling model, in which one salesperson recruits other salespeople who then recruit others to do the same, said police.

Pyramid selling, though legal in some countries, has been banned in China since 1998. Authorities said such schemes had become synonymous with cheating and fraud.

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

Source: Xinhua