CNA Explains: How does China deal with pyramid schemes?

Following the arrest of 52 Singaporeans in Guangxi, CNA speaks to lawyers in China about the laws governing pyramid schemes and potential penalties for different levels of involvement.

China's flag and a gavel seen in a Reuters illustration. (Photo: Reuters/Dado Ruvic)

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SHENZHEN/BEIJING: The arrest of 52 Singaporeans in Guangxi over suspected pyramid-scheme activities has put the spotlight on how such cases are dealt with under Chinese law.

Singapore’s Ministry of Foreign Affairs (MFA) has said the Singapore government does not intervene in foreign judicial systems, even as it continues to provide consular assistance to those arrested.

So what amounts to pyramid selling under Chinese law? Does merely taking part constitute a crime, and what if someone was initially a victim but later recruited others?

CNA looks at key questions about China’s law on pyramid schemes, including how they distinguish between participants, recruiters and organisers, and the penalties they may face.

Is pyramid selling a crime in China?

Not always. Chinese law distinguishes between pyramid-selling activities that are administrative violations and those that amount to criminal offences, said Kevin Hong, a partner at Shanghai-based AllBright Law Offices. “For pyramid schemes, the criminal offence generally applies only to those who organise and lead the scheme, because the law only punishes organisers and leaders,” he said. But organisers and leaders are not limited to those who set up the scheme or sit at the top, he added. Those who manage teams, control funds, conduct training or help expand the network may also fall into this category, Hong said. Can you be punished for joining a pyramid scheme? Yes, but the consequences for mere participation are relatively limited in China, experts said. “Participation in pyramid selling itself constitutes an administrative violation,” said Hong. Under China’s Regulations on Prohibiting Pyramid Selling, mere participants can be ordered to stop and fined up to 2,000 yuan (US$300).

Chinese law distinguishes between pyramid-selling activities that are administrative violations and those that amount to criminal offences, said Kevin Hong, a partner at Shanghai-based AllBright Law Offices.

“For pyramid schemes, the criminal offence generally applies only to those who organise and lead the scheme, because the law only punishes organisers and leaders,” he said.

But organisers and leaders are not limited to those who set up the scheme or sit at the top, he added.

Those who manage teams, control funds, conduct training or help expand the network may also fall into this category, Hong said.

Can you be punished for joining a pyramid scheme?

Yes, but the consequences for mere participation are relatively limited in China, experts said.

“Participation in pyramid selling itself constitutes an administrative violation,” said Hong.

Under China’s Regulations on Prohibiting Pyramid Selling, mere participants can be ordered to stop and fined up to 2,000 yuan (US$300).

What if you were a victim first, and then started recruiting others?

“Being deceived at the beginning does not automatically exempt a person from responsibility, and recruiting others does not automatically constitute a crime,” said Hong.

If someone later became aware that the scheme relied mainly on money from new participants and that the project lacked a genuine source of profit, but continued actions such as recruiting others, collecting funds, training members, managing teams or earning recruitment commissions, they could face administrative or criminal liability, he added.

“You have to be an organiser or leader, because many people at the lower levels have themselves been deceived and lured into the scheme. You cannot possibly punish all of them,” Hong said.

Zhao Feiquan, a criminal lawyer and senior partner from Beijing Yida Law Firm, said the key question was how a person's role evolved after joining such a scheme.

Someone who may have started out as an ordinary participant could move towards criminal liability if they subsequently took on functions that helped operate or manage the network, said Zhao.

He cited the example of people who conducted classes explaining a scheme's rules, rewards and promotion system.

Those who helped disseminate such information or conducted sharing sessions could also be considered actively involved, he said.

“There is a boundary in the transition from being a victim to becoming a criminal suspect,” Zhao said.

“The key question is whether you played a role in assisting the management and operation of the organisation as a whole.”

How does China distinguish between ordinary participants, recruiters and leaders?

Chinese law does not formally divide people involved in pyramid selling into fixed categories of ordinary participants, recruiters and leaders, said Hong from AllBright Law Offices.

Instead, their actual role determines the liability they may face.

Those who bring in new members, collect funds or earn commissions may be considered recruiters or assistants.

But recruiting others alone does not make someone an organiser or leader, Hong added.

Criminal liability for organising and leading pyramid-selling activities would normally require the person to have acted as an organiser or leader in a scheme involving “30 or more persons” and “three levels or more”.

Beijing Yida Law Firm’s Zhao said investigators would look beyond a person’s nominal position in the network to what they actually did.

For instance, people who delivered training on how the scheme worked or helped spread its messaging could be treated as active participants even if they were not among its top leaders, he said.

What penalties do those involved face?

People who introduce, induce or coerce others to join could face heavier administrative penalties, including fines of 100,000 yuan to 500,000 yuan and confiscation of illegal property and unlawful gains.

For those whose conduct amounts to a criminal offence, like organisers and leaders, the penalty could amount to “fixed-term imprisonment of up to five years or criminal detention, and a fine”, said Hong.

In serious cases, sentences can exceed five years, along with a fine. Such circumstances include having 120 or more participants or collecting 2.5 million yuan or more in funds, Hong said.

Beyond the scale of the network and amount of money involved, other factors could also be considered when determining the seriousness of an offence, Zhao said.

“Another consideration is whether minors or people with disabilities are involved, and whether the person has previously received administrative or criminal punishment,” he said.

In Singapore, pyramid schemes are illegal under the Multi-Level Marketing and Pyramid Selling (Prohibition) Act.

Under the Act, it is unlawful for a person to promote or participate in a pyramid selling scheme. Anyone found guilty may be fined up to S$200,000, jailed up to five years or both.

If someone is released after being detained, does it mean they are cleared?

Not necessarily, experts said - although a person's release could reflect investigators' assessment of their level of involvement.

“If they were ordinary participants, or their involvement did not reach the level of an active participant, they may not be prosecuted,” said Zhao.

But it does not mean that consequences will end there.

“It could have an impact,” Zhao said, adding that their circumstances could be reviewed when they subsequently apply for a Chinese visa or seek to enter the country.

Chinese authorities actively crack down on pyramid schemes.

One of China’s most notorious pyramid schemes is the 1040 Sunshine Project, a sprawling multi-level marketing scam that became particularly associated with Guangxi, including the cities of Beihai and Nanning.

It lured participants with promises of extraordinarily high returns and operated under a system known as “five levels and three promotions”.

The system refers to the hierarchical structure used by pyramid schemes to organise its members. Levels are determined by the total number of shares purchased by the individuals and the members they recruited.

Members were reported to have been active in Nanning, Wuhan, Hefei and Guiyang from 2007, and variants of the scheme subsequently appeared in numerous parts of China.

Other notable cases have also emerged over the years.

The founder of a local traditional Chinese medicine firm was jailed in 2020 for running a pyramid scheme.

Shu Yuhui, founder and chairman of Quanjian Nature Medicine Technology Development, was sentenced to nine years in prison and fined 50 million yuan. The company was fined 100 million yuan.

The company was found to have lured victims with large-value rewards into buying overpriced products, becoming the company's members and recruiting more people into the business since 2007, said the People's Court of Wuqing District of Tianjin.

A seven-year-old girl named Zhou Yang had died in December 2015 after taking medicine from Quanjian that claimed to have anti-cancer effects, local media reported.

The company was then investigated for exaggerated advertising and the case also came under police investigation.

Another case in 2018 saw a businessman being jailed and fined for running a multi-billion yuan pyramid scheme and inciting a rare street protest in Beijing against police investigations into his activities.

Zhang Tianming was jailed 17 years and fined 100 million yuan after he used social media to organise a public protest involving more than 600 people from his marketing platform, according to Chinese state media reports.

Zhang and nine other staff from his company, Shenzhen-based Shan Xin Hui, were found guilty of running a multi-level marketing company and of disturbing social order.

The company had lured investors with promises of high rates of return on projects that were meant to help the poor, but had instead paid out early members purely using funds from new joiners, a court investigation found.

Nearly six million people and over 100 billion yuan were involved in the scheme, the court said.

Additional reporting by Lakeisha Leo

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在广西逮捕了 52 名新加坡人之后，CNA 采访了中国律师，了解有关传销的法律以及不同程度参与的潜在处罚。

路透社插图中的中国国旗和木槌。 （照片：路透社/Dado Ruvic）

这段音频由人工智能工具生成。

深圳/北京：52名新加坡人在广西因涉嫌参与传销活动被捕，这让人们关注到中国法律如何处理此类案件。

新加坡外交部表示，新加坡政府不会干预外国司法系统，但会继续向被捕人士提供领事协助。

那么，根据中国法律，什么构成传销？仅仅参与传销是否构成犯罪？如果有人最初是受害者，但后来招募了其他人，又该如何界定？

中央社探讨了中国有关传销法的关键问题，包括如何区分参与者、招募者和组织者，以及他们可能面临的处罚。

在中国，传销是犯罪行为吗？

并非总是如此。上海奥莱律师事务所合伙人洪凯文表示，中国法律区分了构成行政违法行为和刑事犯罪的传销活动。“对于传销，刑事犯罪通常只适用于组织和领导传销的人，因为法律只惩罚组织者和领导者，”他说道。但他补充说，组织者和领导者并不局限于设立传销或身居高位的人。管理团队、控制资金、进行培训或帮助扩大网络的人也可能属于这一范畴。那么，加入传销会被处罚吗？专家表示，答案是肯定的，但仅仅参与传销的后果在中国相对有限。“参与传销本身就构成行政违法行为，”洪凯文说。根据中国《禁止传销条例》，单纯的参与者可能会被责令停止传销活动，并处以最高2000元人民币（约合300美元）的罚款。

上海奥莱布瑞律师事务所合伙人洪凯文表示，中国法律区分了构成行政违法行为的传销活动和构成刑事犯罪的传销活动。

他说：“对于传销骗局，刑事犯罪通常只适用于组织和领导该计划的人，因为法律只惩罚组织者和领导者。”

但他补充说，组织者和领导者并不仅限于那些制定计划或身居高位的人。

洪表示，那些管理团队、控制资金、进行培训或帮助拓展网络的人也可能属于这一类。

加入传销骗局会被惩罚吗？

专家表示，是的，但在中国，仅仅参与的后果相对有限。

“参与传销本身就构成行政违法行为，”洪说。

根据中国《禁止传销条例》，仅参与者也可能被责令停止传销活动，并处以最高 2000 元人民币（约合 300 美元）的罚款。

如果你先是受害者，然后开始招募其他人呢？

“一开始被欺骗并不能自动免除一个人的责任，招募他人也不一定构成犯罪，”洪说。

他补充说，如果有人后来发现该计划主要依靠新参与者的资金，并且该项目缺乏真正的盈利来源，但仍然继续进行招募他人、筹集资金、培训成员、管理团队或赚取招募佣金等行为，他们可能会面临行政或刑事责任。

“你必须成为组织者或领导者，因为许多基层人员自己也被欺骗和诱骗参与了这项计划。你不可能惩罚所有人，”洪说。

北京亿达律师事务所高级合伙人、刑事律师赵飞泉表示，关键问题是，一个人加入此类计划后，其角色会发生怎样的变化。

赵表示，原本可能只是普通参与者的人，如果随后承担了帮助运营或管理网络的职能，就可能面临刑事责任。

他举例说，有些人会举办课程，讲解某个方案的规则、奖励和晋升制度。

他还表示，那些帮助传播此类信息或组织分享会的人也可以被视为积极参与者。

赵说：“从受害者到犯罪嫌疑人的转变是有界限的。”

“关键问题是，你是否在协助整个组织的管理和运营方面发挥了作用。”

中国如何区分普通参与者、招聘者和领导者？

奥莱布瑞律师事务所的洪表示，中国法律没有正式将参与传销的人员划分为普通参与者、招募者和领导者等固定类别。

相反，他们的实际角色决定了他们可能面临的责任。

那些招募新成员、筹集资金或赚取佣金的人可以被视为招募者或助理。

洪补充说，但仅仅招募其他人并不能使一个人成为组织者或领导者。

组织和领导传销活动的刑事责任通常要求该人担任组织者或领导者，参与“30 人或以上”和“三层或以上”的传销活动。

北京亿达律师事务所的赵律师表示，调查人员会超越一个人在犯罪网络中的名义地位，关注他们实际做了什么。

他说，例如，那些提供培训、讲解该计划运作方式或帮助传播其信息的人员，即使不是该计划的高层领导，也可以被视为积极的参与者。

涉案人员将面临哪些处罚？

引荐、诱导或胁迫他人加入者，可能面临更重的行政处罚，包括罚款10万元至50万元，以及没收非法财产和非法所得。

洪表示，对于那些行为构成刑事犯罪的人，例如组织者和领导者，处罚可能包括“最高五年的有期徒刑或刑事拘留，以及罚款”。

洪先生表示，情节严重的案件，刑期可超过五年，并处罚金。这类案件包括参与人数超过120人，或募集资金超过250万元人民币等。

赵表示，除了犯罪网络的规模和涉案金额之外，在判断犯罪的严重程度时，还可以考虑其他因素。

“另一个需要考虑的因素是是否涉及未成年人或残疾人，以及该人以前是否受到过行政或刑事处罚，”他说。

在新加坡，根据《多层次营销和金字塔式销售（禁止）法》，金字塔式骗局属于非法行为。

根据该法令，任何人不得推广或参与传销活动。任何被判有罪者，最高可被处以20万新元罚款、五年监禁或两者并罚。

如果有人被拘留后获释，是否意味着他们被证明无罪？

专家表示，不一定如此——尽管释放一个人可能反映出调查人员对其涉案程度的评估。

赵说：“如果他们是普通参与者，或者他们的参与程度没有达到积极参与者的水平，他们可能不会被起诉。”

但这并不意味着后果就此结束。

赵先生表示，“这可能会产生影响”，并补充说，当他们随后申请中国签证或试图入境时，他们的情况可能会被重新审查。

中国当局积极打击传销活动。

中国最臭名昭著的传销骗局之一是“1040阳光计划”，这是一个庞大的多层次营销骗局，尤其与广西（包括北海和南宁等城市）联系在一起。

它以极高的回报承诺吸引参与者，并采用被称为“五级三晋升”的系统运作。

该系统指的是金字塔骗局用来组织其成员的层级结构。层级取决于个人购买的股份总数及其招募的成员人数。

据报道，该组织成员从 2007 年起在南宁、武汉、合肥和贵阳等地活动，随后该组织的各种变体在中国各地出现。

这些年来还出现了其他一些引人注目的案例。

2020年，一家本地中药公司的创始人因经营传销而被判入狱。

权健天然医药科技发展有限公司创始人兼董事长舒玉辉被判处九年有期徒刑，并处罚金五千万元；该公司被罚款一亿元人民币。

天津市武清区人民法院表示，经查明，该公司自 2007 年以来，以高额奖励为诱饵，引诱受害者购买价格过高的产品，使其成为公司会员，并招募更多人加入该公司。

据当地媒体报道，一名名叫周阳的七岁女孩于 2015 年 12 月因服用全健药房声称具有抗癌功效的药物而死亡。

随后，该公司因夸大广告宣传而受到调查，该案件也引起了警方的关注。

2018 年的另一起案件中，一名商人因经营数十亿元人民币的传销骗局，并在北京煽动罕见的街头抗议活动，反对警方对其活动的调查，而被监禁并处以罚款。

据中国官方媒体报道，张天明利用其营销平台通过社交媒体组织了一场有600多人参与的公众抗议活动，被判处17年有期徒刑并处罚金1亿元人民币。

张某及其公司深圳的单新汇的其他九名员工被判犯有经营多层次营销公司和扰乱社会秩序罪。

法庭调查发现，该公司以帮助穷人的项目将带来高回报率的承诺来吸引投资者，但实际上却完全用新加入者的资金来支付早期成员的收益。

法院表示，该骗局涉及近600万人和超过1000亿元人民币。

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