28 jailed in Beijing investment scam
Twenty-eight people were jailed on Monday by a Beijing court that found them guilty of running an investment scam that defrauded over 22,000 investors.business Updated: Mar 23, 2009 16:52 IST
Twenty-eight people were jailed on Monday by a Beijing court that found them guilty of running an investment scam that defrauded over 22,000 investors.
The accused, who all worked for the Yilin Wood Company, were alleged to have defrauded more than 22,000 investors of 1.68 billion yuan ($246 million) by promising high returns on sales of forestry plantations.
The scam, which is also referred to as a pyramid scheme, involves one salesperson recruiting other sales people, who in turn recruit more.
The 28 accused were given jail terms ranging from one to 15 years, said sources in the Second Intermediate People's Court of Beijing.
Zhao Pengyun, the scheme's leader, was jailed for 15 years and fined 300.34 million yuan ($44 million). Other accused were fined from 200,000 to 70 million yuan and six were given suspended sentences.
The judge said the culprits made illicit gains and their operation severely disrupted the market economy.
The ringleaders used the money to purchase houses, cars, jewellery, watches and antiques. One even spent the proceeds on releasing his own music album and cosmetic surgery.
While in jail in early 2004 for another scam, Zhao, 39, planned the pyramid scheme with two other inmates.
Although pyramid selling is allowed in some countries, it was banned in China by a cabinet regulation in 1998. Authorities said such schemes have become synonymous with cheating and fraud.