Find a list of your saved stories here

China police detain Ponzi scheme suspects after rare protest


Save Story

Save stories to read later


Estimated read time: 2-3 minutes

This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

BEIJING (AP) — Beijing police have detained 67 people involved in a suspected pyramid scheme after its members held a rare, large-scale demonstration in China's capital this week to protest the government's investigation.

Videos circulating on social media showed what appeared to be hundreds of people, if not far more, waving Chinese flags and banners on Monday to demand that authorities back off the probe into the Shenzhen-based "Kindness Exchange" investment fund. Many members have defended it as a legitimate poverty relief charity, while others are worried about getting their investments back after police recently arrested the fund's founder, Zhang Tianming.

Stories of large-scale fraud are commonplace in China, but authorities were likely embarrassed by the massive demonstration near the offices of state prosecutors. Many protesters traveled from neighboring provinces to gather at the location just kilometers (miles) from the heart of Beijing where police are typically expected to quickly snuff out signs of social unrest.

Security in the capital has been tightened in recent weeks as China prepares to host a sensitive congress of the ruling Communist Party later this year.

Beijing's public security department said on its Weibo social media account late Wednesday that the protest was an "illegal gathering" incited by group members. The post said police released those who showed remorse after "re-education," but would take harsh measures against others suspected of incitement.

Chinese authorities have struggled for decades to contain the proliferation of Ponzi schemes and other types of fraud conducted on a mass basis. Their growth has only accelerated in recent years with the spread of mobile banking and social media platforms that quickly pull in elderly or less-educated investors.

"Kindness Exchange" was set up in May 2013 and advertised itself as a campaign against social inequality, according to state media reports. Members who characterized themselves as "poor" and contributed 3,000 yuan ($445) would get as high as 50 percent returns after just one month, while "rich" members who gave 50,000 yuan ($7,400) would see returns of 10 percent, graphics from its now-defunct website showed.

In another well-known case, a massive peer-to-peer lending scheme based in central China, called Ezubao, attracted $7.6 billion from investors in less than two years. Since the fund was shut down in late 2015, fleeced investors have continuously petitioned authorities in Beijing to demand their money back.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Most recent Business stories

Related topics

Business
GERRY SHIH

    STAY IN THE KNOW

    Get informative articles and interesting stories delivered to your inbox weekly. Subscribe to the KSL.com Trending 5.
    By subscribing, you acknowledge and agree to KSL.com's Terms of Use and Privacy Policy.

    KSL Weather Forecast