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December 17, 2009

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Court upholds verdict in pyramid scam

A COURT upheld a man's 38-month sentence after he set up an online pyramid scheme and attracted 1.1 million yuan (US$161,054) from investors, judges said yesterday.

Hu Ruiyun, a 54-year-old Hunan Province native, attracted more than 20 "investors" over a period of two months last year by promoting a so-called foreign currency investment project, according to Shanghai No. 1 Intermediate People's Court.

Hu, who only completed junior school, got the idea to set up a pyramid scheme via the Internet last year.

He traveled to Shanghai's Jinshan District and Zhejiang Province's Pinghu City from September to November 2008, promoting a made-up foreign currency investment project by Holm Global Holdings.

He claimed each investor needed to deposit money to Holm's account before getting the registration number and password for the fake company's Website. Registered members received monthly returns of about 5 percent.

If members introduced more investors, they could get higher returns. Hu said the returns were based on how many investors a member had introduced to the company.

Judges said it was a typical pyramid scheme.

More than 20 people were lured to join the scheme, investing some 1.1 million yuan. When the so-called investment Website was closed on November 25, 2008, the investors failed to get back about 500,000 yuan in capital, the court said.

After police caught Hu, they froze his bank account, which contained 103,000 yuan.

Hu was sentenced to 38 months in prison for organizing a pyramid scheme by Jinshan District People's Court earlier this year.

In the appeal, he argued he didn't organize the scheme and that the amount of money involved was less than 1.1 million yuan.

Shanghai No. 1 Intermediate People's Court rejected the argument, saying Hu lacked evidence to back his claims.


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