July 25, 2018 / 11:27 AM / 3 months ago

Chinese police break up $1.5-billion pyramid scheme, snare 82 suspects

BEIJING (Reuters) - Chinese police have caught 82 suspects in a crackdown on an online pyramid scheme involving 10.2 billion yuan ($1.51 billion) and more than 220,000 investors, the official Xinhua news agency said on Wednesday.

Investors were drawn in from Hong Kong, Taiwan and Southeast Asia as well as the mainland, it said, adding that prosecutors had taken charge of 52 suspects accused of organizing and leading the pyramid scheme.

Police in Meishan City in the southwestern province of Sichuan said the suspects set up hundreds of shell companies and 28 fake industrial chains and lured investors with promises of high returns, it added.

Beijing periodically clamp down on what it deems to be illegal fundraising schemes, including online peer-to-peer lending platforms and pyramid schemes.

In January, a Chinese court sentenced two people to life in prison for fraud in a 15.6-billion-yuan ($2.3-billion) pyramid scheme.

Pyramid schemes in China typically prey on vulnerable or poorly educated victims by luring them with the promise of well-paid jobs. Victims are told, often under duress, to recruit family and friends or borrow money from them.

Reporting by Se Young Lee; Editing by Clarence Fernandez

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