NANNING – A crackdown on pyramid schemes in the Guangxi Zhuang autonomous region is leading to an exodus of scam artists from the area.
Pyramid schemes have been rampant in Guangxi, due to the convenient traffic, low expenses and loose regulations. The number of pyramid sellers in Guangxi has been estimated at more than 2 million, with billions of dollars involved, according to a report from Southern Weekly.
The number of passengers at the railway station in Laibin, a city known for rampant pyramid schemes, soared from 200 to more than 800 on Sunday night, according to a report from China National Radio.
Many sellers have found other ways to flee.
So far, authorities in Guangxi have detained 768 suspects and sent another 1,900 pyramid-sellers back to their hometowns during the campaign, which has destroyed 19 pyramid dens.
Pyramid schemes – in which new members pay a fee with the hope of collecting a windfall if they convince enough people to join as well – have been banned since 1998 and are synonymous with cheating and fraud.
Pyramid schemes usually involve well-organized groups, with some disguised as legitimate corporations, chain stores or investment projects.
Books introducing methods of “chain sales”, a phrase hinting at pyramid sales, are available in many local bookstores in Nanning, capital of Guangxi.
A former pyramid seller told China Daily on condition of anonymity that he had been cheated into a pyramid scheme by his relative, who told him he could make a big fortune in “network direct sales”.
The pyramid seller, once a farmer in the impoverished village of Rizhao, Shandong province, handed over 5,000 yuan ($782) to his relative as the “membership fee” to join a pyramid organization. He tried to persuade his friends and relatives to join the organization afterward but failed.
“I was allowed to quit one year after I joined the organization, because I could not find anyone to join us,” he said. “But most of the other pyramid sellers are addicted to the job since they managed to cheat more people into the game.”
Pyramid sellers were told they could make 3.8 million yuan as long as they invested 3,800 yuan and persuaded as many newcomers as possible to join, according to a report carried by China Central Television.
More than 50 pyramid sellers, most of whom were college students, were found in a hotel near the local bus station in Liuzhou, a city of Guangxi on Aug 13. They said their classmates showed them how to earn their tuition fee in Guangxi through a “capital operation”, the Liuzhou public security bureau said on Sunday.
The Ministry of Public Security is going to deploy all public security departments nationwide to search, fight against and educate pyramid sellers to prevent them from gathering and committing crimes, Liu Lujun, director of the economic crimes investigation bureau under the ministry, said on Sunday.
Just before the crackdown in Guangxi, pictures of a young man whose thumb had been severed by a knife began circulating on the Internet. The police later found that the man, a pyramid seller, had faked the photo with gangs to extort money from his parents by pretending he had been kidnapped.