15 stand trial over pyramid scheme

Fifteen main suspects in China's largest online pyramid scheme stood trial Tuesday as a group at Wucheng District People's Court in Jinhua, Zhejiang Province, a court employee confirmed to the Global Times.

The scheme, which involves 24 billion yuan ($3.92 billion), has swindled 2 million people from 31 provincial regions, the unnamed employee from the court told the Global Times.

The official added the trial would continue on Wednesday, without saying when the verdict would be announced. The Xinhua News Agency reported the court will announce the sentences at another time.

The local prosecutor's office charged the suspects, shareholders of the Zhejiang Yijia E-commerce Company and its affiliated Jinhua-based shopping website wjgwnpyjh.diandian.com, for organizing and leading the pyramid scheme.

Four suspects first co-founded the Yijia e-commerce company in May 2010, and eight more shareholders joined seven months later.

The company started to promote its business and lured online shoppers from July 2011 on the website and its franchised store network by offering 500 yuan after buying goods worth 500 yuan. The company sold products including digital items, clothing and toys.

Until June 11, 2012, when the website was shut down by local officials in Jinhua, the website had more than 1.9 million members and some 100,000 franchised online stores, meanwhile, it owed its members 2.4 billion yuan, including the 500-yuan offers that had not been paid out. 

The local prosecutor's office said the activities of the suspects have severely breached the normal market order and they should be punished in accordance with criminal law.

The website, which still exists, said Yijia is a high-technology enterprise backed by the local government and enjoys a three-year duty-free period.

The trial comes after another online pyramid scheme was busted in Xuzhou, Jiangsu Province. It attracted 20,000 members and cheated people of cash in the name of charity, the Beijing-based Legal Daily reported Friday.

"Online pyramid schemes cover more people and regions than the traditional model," Wu Hongwei, a law professor with Renmin University of China, told the Global Times Tuesday. "More secretive, it's hard to spot them and they mainly attract people who dream of being a millionaire overnight."

On June 3, 12 government agencies including the Ministry of Public Security and the State Administration for Industry and Commerce, launched a three-month campaign to crack down on illegal pyramid schemes, making it the largest of its kind in recent years, China National Radio reported.

In 2012, public security authorities across the country dealt with 11,000 pyramid scheme cases, with 36,000 suspects arrested and 2.3 billion yuan of illegal income retrieved.