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China toughens pyramid scheme busting

BEIJING, Sept. 2 (Xinhua) -- A five-month crackdown on pyramid schemes led to millions of yuan seized and thousands of arrests, the State Administration for Industry and Commerce (SAIC) said on Tuesday.

The campaign, carried out by the SAIC, the Ministry of Public Security and other authorities from March to July, cracked 1,446 pyramid schemes involving 3.7 billion yuan (606.8 million U.S. dollars).

A total of 3,911 people are being investigated and 64.4 million yuan has been seized.

The crackdown busted a number of major pyramid schemes with severe punishments delivered to core participants, the SAIC said.

A pyramid scheme is a business model based on enrolling increasing numbers of participants instead of real sales or investment. In such a scheme, an organization promises new members a share of the money taken from the people they recruit.

Pyramid schemes are prohibited in most countries and Chinese police have been fighting it for years as cases often involve fraud, confinement or other crimes.

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