China's ponzi scheme

Chinese men jailed for life after their US$2.4 billion pyramid scheme conned 200,000 people

PUBLISHED : Wednesday, 10 January, 2018, 8:00am
UPDATED : Wednesday, 10 January, 2018, 8:01am

A Chinese court has sentenced two people to life imprisonment for fraud in a 15.6 billion-yuan (US$2.39 billion) pyramid scheme that sucked in more than 200,000 people.

The key figures in the scheme, Huang Dingfang and Cai Keyi, were convicted on Monday at the Hangzhou Intermediate People’s Court, according to a statement on the court’s website.

Some 19 others who were involved were given sentences of up to 12 years, the court in the eastern Chinese city said.

Huang set up Longyan e-commerce Co Ltd in January 2015 and worked with another firm owned by Cai to swindle over 200,000 investors out of more than 15.6 billion yuan, the court said.

They promised annual returns of more than 250 per cent to investors who paid in 4,000 yuan each.

Pyramid schemes: a dark corner of China’s economic miracle

They then set up a third firm to sell shares, saying it would go public in the United States. The court said it had ordered the 21 defendants to return over 5.7 billion yuan to more than 170,000 investors.

China has launched a campaign to stamp out pyramid schemes, which typically promise people they can get rich by joining and then recruiting new investors.

Cases investigated by Chinese police in the first nine months of 2017 involved nearly 30 billion yuan, the official Xinhua News Agency said in October.