• Mon
  • Oct 20, 2014
  • Updated: 6:02am
PUBLISHED : Monday, 29 April, 2013, 5:16pm
UPDATED : Thursday, 29 August, 2013, 4:13am

Street protest after Anhui police bust pyramid scheme

BIO

Patrick Boehler has published on China and Southeast Asia in four languages for publications in the US, Europe and Asia. After stints with Austria's ministries of defence and foreign affairs in Vienna and Beijing, he began his reporting career in Kuala Lumpur with the Malaysian online news portal Malaysiakini and, later, The Irrawaddy Magazine, a Myanmar exile publication in Thailand. He holds a doctorate in political science and has taught journalism at the University of Hong Kong. Follow him on Twitter: @mrbaopanrui
 

Hundreds people involved in a pyramid scheme in Anhui blocked a road in Hefei, the provincial capital, to protest against a police crackdown on the scheme's operators, fearing the loss of their investment.

For three hours, some 300 people blocked a road and shouted insults at policemen and urban management officials who arrived to open the road, the Southern Metropolis Daily reported.

Eventually the authorities persuaded the protesters to disperse peacefully.

The raid by the Hefei police unit tasked with fighting pyramid schemes that sparked the protest happened last Thursday.

It was just the latest of many recent busts of so-called pyramid scheme hideouts that are part of a crackdown by authorities on what seems to be a lucrative business in the city of 10 million people.

The crackdown, which began last June, has busted 619 hideouts and led to the arrest of nearly 2,000 people, the Hefei Daily said on April 25.

A pyramid scheme promises exorbitant profits on money credulent investors put into a central fund. In some schemes, even higher profits are promised and even made if participants can attract other investors. But the fund collapses under the weight of the high returns and its managers disappear.  

The local Xinan Evening News had reported one such scheme one week prior to the police bust that led to the protest. The newspaper embedded a journalist in a pyramid scheme.

The fraudsters had promised the journalist that an investment of 69,800 yuan (HK$87,900) would turn into at least 10.4 million yuan within two years. The initial investment equals almost three times the average income of an urban resident in the city and more than seven times that of a rural resident.

The initiation rites began with a free dinner of fish, a traditional symbol of wealth, followed by days of "brainwashing".

Newcomers to the scheme can only join by invitation.

Members had to adhere to a bizarre set of rules, the paper reported. They would say "Good morning" at any time of the day, be prohibited from wearing slippers during work hours, and men weren't allowed to unbutton their shirts' second button from the top.

In January, the city of Hefei began issuing rewards for tip-offs on pyramid schemes and publishing notices warning migrant workers that if they were caught participating in such schemes, they would be deported to their home villages.

Last August, an unrelated pyramid scheme involving at least two billion yuan was uncovered in the Inner Mongolia Autonomous Region.

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