www.chinaview.cn 2006-11-23 23:38:57

BEIJING, Nov. 23 (Xinhua) -- A company in northeast China raised three billion yuan (379 million U.S. dollars) from gullible members of the public by promising big profits from a project to breed ants.

The Donghua Ecological Breeding Co. Ltd., in Liaoning Province, offered returns of 35 to 60 percent on investments in the bogus project.

The Ministry of Public Security (MPS) cited the case on Thursday as an example of how fraudsters were getting more devious and imaginative.

Chinese police investigated 62,000 economic crimes in the first10 months of the year, an increase of 9.1 percent over the same period last year.

Economic crimes, especially those involving large numbers of people, such as pyramid selling or fund-raising frauds, "could trigger social instability and imperil the economic security of the country", warned Gao Feng, deputy director of the MPS economic crime investigation bureau.

Pyramid schemes were being sold through the Internet, Gao said.

A medicine pyramid selling company in Guizhou Province enrolled more than 100,000 members online in Shandong and Henan provinces and illegally sold 126 million yuan worth of medicines.

Police ferreted out 49,000 of the reported cases, a rise of 4.3percent, and retrieved 12.94 billion yuan, or 51.8 percent more than that of the same time last year, said Gao.

Police recovered 399 million yuan in 507 cases involving the illegal pooling of public funds and 169 million yuan from 501 cases of alleged fund-raising fraud.

Pyramid selling first entered China in the 1980s, soon after the country kicked off its remarkable economic reforms. But it was banned by a cabinet regulation in 1998 which said that such schemes, though an accepted method of marketing in many other countries, "have become a synonym for cheating and hoodwinking in China."

"Pyramid schemes have never been 'dead ashes' in China," said Gao Feng, using a traditional Chinese phrase to emphasize that despite repeated crackdowns, pyramid schemes are still alive and kicking.

In 2006, police in eastern Shandong Province cracked a cosmetics-sales scam that took in about 500,000 people in nearly 16 provinces. Two billion yuan were involved.

Pyramid scams exist in both rich and poor regions across the country, Gao said.

On Thursday, police spokesman Wu Heping advised citizens to keep hold of their purse strings when someone tries to sell them a "get-rich-quick" scheme.

"There is no such thing as a free lunch. You might have had one lucky experience, but don't think about trying a second time," warned Wu, adding that ordinary people don't need economics and marketing degrees to avoid being cheated.

All they have to do is to shun salespeople who wax lyrical about lucrative deals, he said.

The spokesman, himself an experienced police officer, blamed media for running ads from suspect companies, saying the fraudsters might take advantage of public trust in the media to net more gullible people.

According to Chinese laws, suspects convicted of economic crimes such as defrauding citizens of their savings, illicit businesses and racketeering can be jailed for three to ten years or even for life behind the bars.

Chinese laws recognize different types of pyramid selling scheme. People guilty of organizing and running the worst schemes face prison terms of more than five years and can be ordered to repay up to five times the profits generated by their illegal business operations.