On the evening of 30th June, police stormed a residential compound in Yuhuatai district, capturing 236 suspects.
20 police vans were needed to transport off the alleged participants in a large-scale scam. In total, the scam racked up an amount of about 10 million RMB, with Yuhua District being the stronghold of the major operation, which had been running across five Chinese provinces, including Jiangxi, Hunan, Hubei and Guangxi.
They had been reported to the police in march by a Mr. Chen, a migrant worker, who had been working in Nanjing and invested all his savings, some 10,000 RMB, to pay for a so-called “training course” offered by the fraudulent company. When he found that he left the course with not even enough money for public transport but having learnt nothing whatsoever, he informed the local police. However, during the ensuing investigation it emerged that Mr. Chen had invested in a pyramid marketing scheme, and had been scared to admit his involvement for fear of being fined.
When a number of residents of the compound in which the ploy was being operated further complained about a large amount of strangers suddenly moving into the surrounding flats, the police began collecting evidence through 24-hour surveillance. Finally, on Tuesday evening, 550 officers stormed the buildings, taking the over 200 participants into custody.
Pyramid Schemes in China
Pyramid schemes present a major problem to China. They operate on recruiting victims to invest with promises of impossibly high return. The money from later recruits is used to pay earlier investors for a time, until of course the money runs out. In addition to financial scamming, participants are further brainwashed, at times attending daily “classes” that almost have a cult-like set-up. While pyramid schemes are in fact illegal in China, “direct selling” to customers is not. Organisers behind pyramid schemes blur the lines and exploit the lack of knowledge and naïveté among the general populace to make money.
What is worse, they usually encourage those who have fallen into their trap to approach family members and close friends to invest in the scheme. In China, mistrust of strangers is rooted particularly deep, no wonder considering the history of denouncement during the cultural revolution. Close friends and family, however, enjoy almost indestructible trust and therefore are perfect recruiters to expand a pyramid scheme. Mr.Chen himself was approached by friend from his rural hometown and believed him due to their “close ties”.
First WeChat Scam Busted in Nanjing
With the advent of the mobile age, ways to scam people seem to be increasing daily. Countless cases have emerged of hackers using WeChat and QQ accounts to get in touch with the account-holders friends and family, feigning an emergency to get them to send money to the hacker’s accounts. However, Nanjing now has had the dubious honour of seeing the first-ever case of a WeChat pyramid scheme, which operated entirely online. Masterminded by a Chen Zhihua, a self-proclaimed “Asian Hypnosis Master,” he used the internationally famed software to market his services, promising that listeners of his speeches would gain the tools to earn large amounts of money. A membership fee was necessary to access his lecture, and commissions were available for users who managed to attract other members. After being discovered, Chen was sentenced to prison for eight years and fined 10,000 RMB.
