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Investigation launched into pyramid scheme

LOCAL industrial and commercial authorities are investigating a company that is suspected of promoting a pyramid scheme, officials said yesterday.

The MDG International Technology Group Ltd, which claims to be based in Hong Kong, said people who take part in its cell phone software sales chain can earn up to 2 million yuan (US$292,558) a year, the Shanghai Industrial and Commercial Administrative Bureau said.

The company provides a VOIP service (voice over Internet protocol) called Mycool. People can choose from five packages with prices ranging from 330 yuan to 6,600 yuan to receive unlimited services such as video calls, movie downloads to their phones and cheap long distance calls.

Those who buy packages costing more than 1,650 yuan can become agents for the company and go on to earn money by selling packages to other users and signing up more people to become agents.

The company hosted a lecture in the city over the weekend, saying agents would earn a 5 percent commission from every package sold.

"Even if you are not able to sell packages to others, you can also earn money because your referrals will share profits with you," Peng Yue, who said he was one of the firm's agents in Shanghai, told Shanghai Daily yesterday.

China Mobile officials said the country has not given permission for VOIP services, and the Mycool package was illegal. Once the government blocks the Mycool Website the services will fail, and customers would lose their money, China Mobile officials said.

In other provinces, MDG offices have been raided, but the firm's senior management has yet to be found.


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