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Going against the slippery slope of a pyramid scheme

By Hu Yongqi (China Daily)
Updated: 2010-07-29 15:08

Groups that help victims must face scammers, fund shortages and bureaucracy. Hu Yongqi reports in Beijing.

Last month, a Beijing woman surnamed Liu was promised 10 million yuan ($1.5 million) within three years if she joined a scheme that involved enrolling her friends and family.

She thought it was a joke, but after traveling to Nanning, capital of the Guangxi Zhuang autonomous region, and listening to the organizer for four days, she was convinced and handed over 69,800 yuan. Earlier this month, she turned to her daughter and son-in-law for more cash to invest.

"It was really strange because the amount of profit promised was so high," Liu's daughter said. "So I checked on the Internet and discovered it was a pyramid scheme."

She searched online, found the China Anti-pyramid Selling Association website and contacted its president, Li Xu. He agreed to pretend to be a professor of economics and over a long dinner tried to convince Liu that she had been duped.

Related readings:  China cracks down on 3,000 pyramid sales gangs  'Renovated' pyramid may topple over  300 pyramid salesmen arrested  Police bust pyramid selling involving 409 in Chongqing

When she eventually realized that she was the victim of a pyramid scheme, Liu broke down in tears. Later, together with Li she tried to recover a total of 139,600 yuan that she had paid into the scheme and to date has recovered just 19,000 yuan.

Her case is one of the approximately 6,000 complaints that Li and his team in the China Anti-pyramid Selling Association have dealt with since it was established in 2006.

Li estimates that currently there are approximately 10 million people involved in pyramid schemes, in 248 cities and 29 provinces, municipalities or autonomous regions.

The association's office is a nondescript 60 square meter apartment in Songjiazhuang, Fengtai district, Beijing. It has two bedrooms, a sitting room and a small kitchen, three desktop computers and one laptop.

In the sitting room, three people are answering calls while one staff member snatches some sleep on a bunk bed in one of the bedrooms. Another man eats instant noodles.

On the wall is a red banner that reads: "Bringing better vision for trapped people." It was made by a woman surnamed Shen (who, like others in this report, did not want to give her full name for fear of retaliation), who presented it to the association after her mother was trapped in a pyramid scheme last year.

Police investigate a pyramid scheme in Dayang town of Hefei, capital of Anhui province in June. The government had broken up 10,980 pyramid schemes between 2006 and September last year. [Yu Junjie / for China Daily]