US-based ponzi scheme rips off 200,000 investors
By Leeann Li |
October 27, 2012, Saturday
|
Print Edition
Print Edition
US-BASED ponzi scheme website Hootoot660 has been busted after allegedly swindling 200,000 Chinese people out of 2.4 billion yuan (US$384 million), police said.
The perpetrators targeted short-term profit-seeking investors by promising high returns. People were first required to pay 660 yuan to 12,540 yuan in membership fees and were then encouraged to buy an online stock called Guquan, which was said to never drop in price, and attract more members to earn commissions, Yangtze Evening News reported yesterday.
To earn trust, the website paid off early investors with the money paid in by new clients, the report said.
The case came into the spotlight in April when police in Xinyi City in Jiangsu Province found hundreds of residents registered to Hootoot660, a website that has no real business.
A preliminary police investigation found the website was operating a pyramid selling scam.
A Chinese businessman surnamed Yun started Hootoot trading company in Texas in 2010 and opened the website one year later. But the company didn't do well until he masterminded the plan to promote a virtual stock in January and cheat people out of billions of yuan, the report said.
Hootoot's co-founder, surnamed Pang, was arrested in Henan Province on May 3 and a major Internet engineer surnamed Xie was caught in Guangdong Province on May 10 in joint police raids. Other ringleaders on the Chinese mainland were also caught although Yun remains at large.
The perpetrators targeted short-term profit-seeking investors by promising high returns. People were first required to pay 660 yuan to 12,540 yuan in membership fees and were then encouraged to buy an online stock called Guquan, which was said to never drop in price, and attract more members to earn commissions, Yangtze Evening News reported yesterday.
To earn trust, the website paid off early investors with the money paid in by new clients, the report said.
The case came into the spotlight in April when police in Xinyi City in Jiangsu Province found hundreds of residents registered to Hootoot660, a website that has no real business.
A preliminary police investigation found the website was operating a pyramid selling scam.
A Chinese businessman surnamed Yun started Hootoot trading company in Texas in 2010 and opened the website one year later. But the company didn't do well until he masterminded the plan to promote a virtual stock in January and cheat people out of billions of yuan, the report said.
Hootoot's co-founder, surnamed Pang, was arrested in Henan Province on May 3 and a major Internet engineer surnamed Xie was caught in Guangdong Province on May 10 in joint police raids. Other ringleaders on the Chinese mainland were also caught although Yun remains at large.
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