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August 13, 2011

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Huge scam ran with cops nearby

FORTY-ONE people in a southwestern China's city were detained yesterday for allegedly organizing a pyramid scheme after a TV report revealed they used places near police stations and the city hall to promote the illegal business but weren't caught.

Thousands of people from all over China were tricked into flocking to Laibin, a city in the Guangxi Zhuang Autonomous Region, to participate in the pyramid scheme, China Central Television reported on Thursday.

Organizers used Laibin Park next to a police station and the square in front of city hall as gathering places for pyramid sellers to do business because they could convince newcomers that their business was legal, the report said.

"The police station is just 50 meters from us. If we are involved in illegal business, do you think they will tolerate us?" a seller asked a CCTV reporter with an effort to draw him into the scheme. "We have been doing business here for more than a decade. They didn't have any plan to chase us away."

The materials the promoters distributed included fake reports by influential media and government documents that touted the pyramid scheme, according to CCTV.

Most participants didn't know much about the scheme. They were told they could earn 3.8 million yuan (US$594,000) with a tiny investment of only 3,800 yuan in one or two years.

After seeing the TV program, authorities took actions on Thursday night to crack down at six venues, arresting 41 suspects and confiscating more than 1,000 propaganda publications, the local government said yesterday.

But city officials admitted they need to map out a long-term plan to clamp down on pyramid activities, which have seen a rebound this year.

A local taxi driver told CCTV that Laibin City government used to turn a blind eye to the practice of pyramid schemes. "They just cracked down on some (illegal activities) but didn't deal with the root of the problem," he said.

According to the CCTV report, the China Anti-Pyramid Selling Association said it had received reports from 30 provinces and autonomous regions about people buying into the hoax and traveling to Guangxi for the pyramid scheme.

In the Inner Mongolian city of Ulanqab alone, more than 2,000 people were locked in the Guangxi pyramid schemes, including farmers, businessmen, retirees, teachers and public servants. Some committed suicide after losing all their money.

A farmer surnamed Du in Ulanqab told CCTV that he came with his wife to Laibin after selling his car and cow for 40,000 yuan and borrowing 100,000 yuan from others.

Within months, they had lost everything.

 

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