Eight held in scheme targeting elderly

PUBLISHED : Saturday, 27 May, 2006, 12:00am
UPDATED : Saturday, 27 May, 2006, 12:00am

Pyramid investment plan attracted 200 people, mostly women over 60, and offered large returns

Three directors and five employees of two companies have been arrested over an alleged pyramid investment scam that targeted mostly elderly people and promised them lucrative returns.

Police estimate the scheme lured about 200 victims over a period of 15 months and said most were women aged over 60.

Acting Superintendent Gloria Kwok Lai-han of the Commercial Crime Bureau (Fraud) said the total amount involved was more than $2.1 million. The largest single case involved about $270,000.

The two companies - an investment firm in Kowloon Bay and a beauty salon in Mongkok - began recruiting members in February last year.

Victims were persuaded to join the investment plan and were given coupons to redeem free treatments at the beauty salon or health foods and drinks from the investment firm, police said.

Bureau Senior Inspector Rebecca Ip Kin-wai said most of the victims knew the companies through their friends or relatives. 'Some victims joined because it was an investment plan with lucrative returns and they could have free healthy food,' she said.

Investigations revealed the investment company held a tea gathering in a Mongkok restaurant twice a week, offering free dim sum to its clients and their friends to persuade the friends to join the investment plan.

'The victims were told that it was a prospective healthy-food agency and had plans to list on a stock market in the United States,' Ms Ip said. She said the victims paid $800 to join and were then persuaded to invest more money to complete the investment plan, which could last one or two years.

'The company in return issued them with coupons that the victims could use to buy health food, bath oil, body lotion or have facial treatments in the beauty salon in Mongkok,' Ms Ip said.

She believed the value of the products and treatments offered by the companies was probably exaggerated.

It was claimed a bottle of bath oil - made in Taiwan and not a known brand - was worth about $800 and a facial treatment $3,000.

One investigator said: 'The participants were also awarded cash prizes if they introduced friends to join. A member could be awarded $350 in cash if they introduced two friends.'

In one case, a victim had been lured into joining an investment plan by paying about $2,000 and was promised a cash return of more than $9,000 within 18 months.

'Returns for the investors look lucrative but it is impossible to make money and they will finally lose all the money when the company folds,' Ms Ip said.

The Commercial Crime Bureau started its investigation after receiving a complaint in February.

On Thursday, officers raided the two offices and arrested three men and five women, aged between 29 and 52, for conspiracy to defraud. Last night, they were still being detained for questioning. No one had been charged.

Police urged the public to be cautious if approached with offers of huge returns on an investment.

Anyone with suspicions should call the Commercial Crime Bureau hotline on 2860 5012.