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Court upholds verdict in $187m pyramid scam
(Xinhua)
Updated: 2009-04-09 22:59 HOHHOT -- A Chinese court Thursday dismissed appeals from two executives of a forestry company who were found guilty of defrauding investors of 1.28 billion yuan (US$187 million) in a pyramid case. Chen Xianggui, board chairman of the Inner Mongolia Wanli Afforestation Co., was sentenced to 11 years in jail and 200 million yuan of his personal property was confiscated, according to the High People's Court in north China's Inner Mongolia Autonomous Region.
The two ringleaders were convicted of swindling more than 30,000 investors in 12 provinces, municipalities and autonomous regions by promising high returns on sales of forestry plantations. The case used pyramid schemes in which one salesperson recruited other sales people, who in turn recruited more. The new participants needed to buy to join the operation and the early investors received commissions. The company sold more than 430,000 mu (28,667 hectares) of timber land from September 2002 to August 2007, the court found. Chen and Liu charged investors 1,660 yuan for each mu of land (0.066 hectare) and promised they would get 12 cubic meters of timber in eight years and 15 cubic meters in 10 years, the court said. Such a return represented a quadrupling of the original investments. Although pyramid selling is allowed in some countries, it was banned in China by a Cabinet regulation in 1998. Authorities said such schemes had become synonymous with cheating and fraud. On March 23, 28 accused were given jail terms ranging from one to 15 years and fined 200,000 yuan to 300.34 million yuan in a similar pyramid scheme in Beijing. The accused, who all worked for the Yilin Wood Company, were convicted of defrauding more than 22,000 investors of 1.68 billion yuan by promising high returns on sales of timber land. |
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