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Two sued for pyramid sales scam in Nanjing

By Wang Jingqiong (China Daily)
Updated: 2008-07-15 12:55

The Nanjing procuratorate has filed a lawsuit against two leaders of a 'cultish' group involved in a pyramid sales scheme involving 834 students from 33 universities in Jiangsu's provincial capital.

Yang Zhi, who was known as "an excellent student", and the charismatic ringleader, surnamed Wang, have been detained by authorities for the scheme, which was recently made public by the city's Industry and Commerce Bureau.

The students involved - most of them came from poor, remote areas, and yearned for self-improvement and larger incomes - were drawn into an organization widely described as "somewhat cultish", and centered around the charismatic Wang and ritualism.

The group had founded a membership-based company charging admission fees ranging from 500 yuan ($22) to 1,000.

The Nanjing procuratorate said existing members were to recruit new members, which made both the firm's scam and organization's enlistment self-perpetuating. Lower-ranking members were required to pass their incomes from recruitment to those in higher tiers.

"Yang was sued because he was registered as the 'legal person' of the company and therefore must assume legal responsibility for its actions," an official from the Procuratorate surnamed Xiao said.

Yang comes from a poor family in Hebei province and was eager to make money when he met Wang during his third year in university.

Yang said Wang came to his university in late 2005 to recruit students to help him "work for a cause and achieve success".

Nine students, including Yang, were taken with Wang's charisma and joined the "Career Association of University Students", which later became a trade company selling goods, such as computer components and telephone cards. They then began recruiting other students, which became their core business.

When Yang's teachers learned of his activities, they warned him to stop under the threat of expulsion. So Yang dropped out, and more than 20 others followed suit.

"I didn't know it was a pyramid sales scheme, and I chose to quit school to focus on my career," Yang said.

"We would get up at 6:30 every morning, clean the room after breakfast, recite aphorisms and encouraging stories, and then explain these readings to others," Zhang Tao, a group member from Nanjing Agriculture University, said. "Those who didn't do a good job of explaining their readings would have to do pushups as a penalty."

Wang was idolized by many of the group's members.

Fan Jia recalls the day she asked Wang how she could better express herself. He told her: "Once you free yourself from psychological inhibitions, you can do anything."

He then told her to remove her clothes, and she obeyed.

"I didn't feel any shame at all but just followed him," Fan said.

The Jiangsu provincial government began investigating the case after receiving a letter from several parents concerned about their children's increasingly abnormal behavior.