January 8, 2020 / 2:00 PM / 18 days ago

China court jails founder of traditional medicine firm over pyramid scheme

BEIJING (Reuters) - A Chinese court jailed on Wednesday the founder of a local traditional Chinese medicine firm for running a pyramid scheme, after the death of a young girl with cancer was linked to the company in an online article that sparked anger on social media.

Shu Yuhui, founder and chairman of Quanjian Nature Medicine Technology Development, was sentenced to nine years in prison and fined 50 million yuan ($7.2 million), according to the court. The company was fined 100 million yuan.

Shu was arrested a year ago, soon after an online article recounting the death from cancer of a four-year-old girl who had received treatment from the firm went viral on social media.

The article, on healthcare platform DXY.cn, accused Quanjian of using misleading advertising to attract patients with claims about its treatments. The company said in a social media post at the time that the article was inaccurate.

Quanjian was found to have lured victims with large-value rewards into buying overpriced products, becoming the company’s members and recruiting more people into the business since 2007, the People’s Court of Wuqing District of Tianjin said on its official account on Twitter-like platform Weibo on Wednesday.

Calls to the company seeking comment went unanswered.

Operators of pyramid schemes typically make money by recruiting members, who pay fees to act as salespeople of goods, rather than relying on the sale of the goods themselves.

Founded in 2004 and headquartered in the northeastern city of Tianjin, Quanjian has expanded into an empire with billions of yuan in sales and many hospitals and stores, local media reported.

Reporting by Roxanne Liu in Beijing and Meg Shen in Hong Kong; Editing by Alex Richardson

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