12 in pyramid scheme sentenced, fined

Shu Yuhui, founder of a Tianjin-based health product manufacturer, was sentenced to nine years in prison by a Tianjin court on Wednesday for organizing and leading a pyramid scheme.

The Tianjin Wuqing District People's Court also fined Shu, 51, chairman of Quanjian Nature Medicine Technology Development Co, 50 million yuan ($7.2 million).

Eleven others who participated in the pyramid scheme were convicted of the same charge, and given fines and sentences ranging from three to six years in prison.

The company was fined 100 million yuan, and all illicit money gained was confiscated.

Since 2007, the company had lured people to buy its products at very high prices, and then ordered them to recruit more buyers in exchange for rewards from the company, the court said, identifying it as a serious pyramid scheme.

In handing down the sentences, the court recognized that all of the defendants pleaded guilty, and some of them, including Shu, turned themselves in. Some of the company's illicit gains had been confiscated.

Quanjian's scandal drew public attention on Dec 25, 2018, when popular healthcare information sharing platform, Dingxiang Doctor, claimed in an article that the company made huge profits by misleading consumers.

The article cited Zhou Erli, who said his daughter got a tumor at the base of her tailbone at the age of 4 in 2012 and died in December 2015 after he stopped her hospital treatment. Zhou had decided to have his daughter take Quanjian's herbal products, which were advertised as cancer cures.

In January last year, Shu was detained and the case was publicly heard at the court on Dec 16.

Zhou told Beijing News on Wednesday after he learned of the sentences that he regretted easily trusting the company, which aggravated his daughter's disease.

He said he hopes parents of children suffering from similar illness will not be defrauded by such makers of health products.

Ruan Chuansheng, a law professor at Shanghai Administration Institute, said the pyramid scheme not only cheated people out of money but also disturbed the country's economic order.

"The case related to people's lives, so publicly hearing it and announcing the verdict, I think, is the best way to show the authority of justice on such an issue," he added.