Four in court over chain letter

The promoters of an investment scheme based on a chain letter told potential clients it would give them a return of $2.4 million, a court heard yesterday.

Wai Ping-luen, 34, Lam Kwok-hing, 39, Liu Chak-wing, 28, and Ng Lai-yee, 36, were accused of luring people into a pyramid selling scheme set up by 2.4 Millions Inc Limited, the Eastern Court heard. They each face one charge of promoting a pyramid selling scheme and one of conspiracy to defraud, which they deny.

Magistrate Colin Mackintosh was told that at a seminar organised by the company in December 1998, the defendants promoted a pyramid selling scheme they claimed would produce easy gains. They allegedly told prospective clients that, with an initial outlay of $240, they eventually would earn $2.4 million.

Participants would pay a $65 joining fee to the company. They would then receive a plastic watch and a receipt on which the numbers of seven bank accounts were printed, the court heard. They would have to deposit $25 into each account. Having done that, they would be given five game cards containing the numbers of seven bank accounts, the last of which would be the participant's account number.

The participant would have to find five new players and pass the cards to them. Each new recruit was then required to deposit $25 into each account on the card before being issued with a new set. The new cards would contain the same account numbers as those on their recruiter's cards, except the first number would be removed. The rest of the numbers would move up one level and the new player's account number would appear at the bottom.

Participants were told that the process would be repeated until their account numbers reached the top of the list and were removed. By then they would have $2.4 million, the magistrate was told.

The company caught the attention of the Commercial Crime Bureau in November 1998 when it advertised the scheme in a newspaper. Undercover agents posed as clients before raiding a meeting on December 15, when the alleged promoters were arrested.

An accountant with the bureau found that it was impossible for players to earn $2.4 million because that would require 9.7 million people to take part, a figure that exceeds that of the population of the SAR.

It was the second time charges had been laid under the Pyramid Selling Prohibition Ordinance since its enactment on September 1, 1980.

The case continues today.