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September 5, 2012

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Man gets jail for pyramid scheme

A LOCAL pyramid scheme seller and organizer, who had signed up 259 members and earned a profit of more than 112,000 yuan (US$17,662), was sentenced to one year and six months in prison yesterday by the Xuhui District People's Court.

The convict, Jiang Guobin, a 47-year-old Shanghai native, was also fined 120,000 yuan and had all his ill-gotten money confiscated under the court ruling.

Jiang kept explaining the rule of the "game" to the judge and prosecutors yesterday, saying how he once had been "poisoned" by the scam.

Prosecutors said Jiang became a pyramid seller of Jiangxi Better Life Co through a website in 2009.

To increase his own profits, he expanded his distributors and charged them at least 7,000 yuan per person.

Jiang, who said he had wanted to open an online store, paid about 4,000 yuan to become a distributor of the Jiangxi company, the parent company of - an online shopping mall that sells various goods from clothes, bags, skin-care products and electronic products.

Under the rules, Jiang could post some of the products on the website at his own online store.

He could either shop himself or recommend his friends shop to get rebates in forms of cash and redemption points, the court heard.

"I soon found the shop didn't make profits. So I tried another way, which not until I was held by police did I realize is a pyramid sale scam," Jiang said at yesterday's hearing.

Prosecutors said Jiang began inviting people to become distributors like him and he moved up in levels after more and more people were taken in.

By March 26, Jiang had developed a total of 259 pyramid sale members with 16 levels, which gained him a quite high position and rebate rate under the pyramid sale network.

A judicial examination showed the total turnover of Jiang's shop was only 3,500 yuan in the past three years, but the profits he made from the pyramid sale scam was 32 times the turnover.

"I truly regret my ignorance. I thought I was a manager under the model, but in fact I was only a victim and now a criminal," Jiang said in his final statement.


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