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22 caught running pyramid scheme earned 58m yuan

TWENTY-TWO suspects who organized a pyramid sales scam, earning 58 million yuan (US$9.5 million) in profit were caught in a crackdown that culminated last month after a months-long investigation in Shanghai and neighboring provinces, local police said today.

The case involved 6,900 people lured to participate in the scheme in 28 cities and provinces, with sales of 100 million yuan. Most of these participants are middle aged or elderly people.

Shanghai police received information from industry and commerce authorities in March, saying Cheng Shang Cheng, a household products company in the Pudong New Area, was suspected of organizing pyramid schemes. Police investigated and found the company sold cosmetics and tonic to customers and then tried to convince them to become members. After paying membership dues, these participants were promised to be paid back if they enrolled other people in the scheme.

The pyramid sales case initially was busted in Shanghai on May 2, when the company’s headquarters was raided. Police continued to investigate, catching other leaders of the illegal outfit in neighboring provinces, including Jiangsu, Zhejiang and Anhui provinces on July 16.


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