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Armed police officers stand guard as dozens of suspects are rounded up in Beihai on Wednesday morning. More than 1,200 people were arrested in coordinated raids on 300 properties in the coastal city in southwestern China. Photo: CNS

1,228 arrested in midnight raids as Chinese armed police seek to smash US$54 million pyramid scheme

Local government officials from southern city of Beihai join thousands of police officers in raids on 300 properties

More than 1,200 people have been arrested on suspicion of having links to a 360 million yuan (US$54.5 million) pyramid scheme in southern China, state media reported.

More than 2,100 armed police and local government officials took part in coordinated raids on 300 properties in 27 residential estates in the coastal city of Beihai in the Guangxi Zhuang autonomous region, China News Service reported on Wednesday.

Armed police officers march together before staging multiple raids in Beihai in the early hours of Wednesday morning. The city’s party secretary promised to stamp out pyramid schemes. Photo: CNS

Wang Naixue, the city’s party secretary, was quoted as saying that he would not rest until all pyramid schemes, which disrupt the social order and ruin families, had been eradicated from Beihai.

The raids took place in the early hours of Wednesday morning, China National Radio reported, adding that several lead figures within the scheme were among those detained.

Of the 1,228 people arrested, the youngest were aged in their 20s and the oldest in their 80s, it said.

China News Service said that over the past three years, more than 58,000 people had been arrested in Beihai for their links to pyramid schemes.

Most of those rounded up on Wednesday were from Heilongjiang, Shandong, Shanxi, Inner Mongolia, Hubei, Jiangsu and Zhejiang provinces, it said.

The crackdown came after the Ministry of Public Security last month promised to strike hard against shady financial schemes, and just weeks after four government ministries jointly announced a crackdown on those that specifically preyed on jobseekers.

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The latter came after several unemployed graduates were reported to have died in suspicious circumstances after becoming embroiled in dubious schemes disguised as employment agencies.

While pyramid selling has been illegal in China since 2005, high-profile cases continue to appear. Experts have said that greed and financial ignorance have fuelled their proliferation.

In July, police in Guangdong arrested 230 members of the Shanxinhui (Kindness Exchange) scheme after it was declared illegal. In response, tens of thousands of co-members took to the streets of southern Beijing to protest against the ruling. Among those arrested was Zhang Tianming, the scheme’s alleged mastermind.

This article appeared in the South China Morning Post print edition as: More than 1,200 held over ¥360m pyramid scheme
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