Richard Li

Firm's wax scam makes dummies out of investors

PUBLISHED : Sunday, 25 March, 2012, 12:00am
UPDATED : Sunday, 25 March, 2012, 12:00am


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Chief Executive Donald Tsang Yam-kuen looked happy enough to endorse the product, a free internet-messaging software. So did tycoon Li Ka-shing.

But these high-profile figures - smiling in photos with a head sales officer - were wax models, used in a cross-border pyramid scam that dragged more than 600,000 mainland investors into a financial chamber of horrors, according to a report.

Six people, including the man pictured with the Tsang and Li waxworks at Madame Tussaud's in Hong Kong, were charged over the scheme that fleeced around three billion yuan (HK$3.68 billion) from investors of Mycool software, the Guangzhou Daily reported yesterday.

Victims claimed that Hong Kong-based ABM Technology said Mycool could be used to conduct telephone-like voice conversations via computers, make cheap long-distance calls, send messages and watch movies online for free.

Investors had to buy at least one Mycool product to join the scheme and start earning commissions to recruit new members.

Earlier reports quoted Shenzhen resident Xie Shuhua as saying that she joined the scheme after a neighbour told her that tycoon Li's son, Richard Li Tzar-kai, trusted ABM enough to buy a 30 per cent stake in the company, the daily said.

ABM reportedly promised top-tier recruiters a share of its sales revenue, before notifying members in February 2010 that the firm had been incorporated into Joymain Science and Technology, based in Nanjing , and they should sell Joymain's health products instead of Mycool.

Shenzhen police began investigating ABM two years ago over concerns about sales of its voice-over-internet-protocol (VOIP) software.

To find out more about ABM, Xie, one of those duped in the scam, said she visited the company's Lippo Centre office in Hong Kong in 2009, where she saw the picture of Tsang with the chief sales officer.

She also saw a photo of Richard Li with the salesman. However, the newspaper report did not specify whether this, too, was a picture of a wax model.

Xie then paid 23,000 yuan in special membership fees and another 28,000 yuan to set up a Shenzhen centre for Mycool.

She discovered the company was a fraud after the Joymain merger and when her access to the company's website was halted.