On February 27, 2024, the Supreme People's Court announced that the People's Court Case Database was officially launched and opened to the public. At present, there are 3,711 cases selected in the people's courts' case database. Among them, 1,453 criminal cases (accounting for nearly 40%) covered common crimes and multiple causes of crime.
In addition, in the current version of the People's Court's Case Database, six reference cases related to pyramid schemes can be retrieved using "pyramid scheme" as the keyword.
These six reference cases provide guidance on the characterization of criminal cases of pyramid schemes from six perspectives.
1. Case of Chen Mouzhi et al. Organizing and Leading Pyramid Marketing Activities - Determining the nature of the act of requiring investors to purchase coins to join in and settle the proceeds according to their development and downline in the name of the platform providing virtual currency value-added services
Warehousing No.: 2023-03-1-168-001Trial Court: Dongtai Municipal People's Court of Jiangsu Province, Yancheng Intermediate People's Court of Jiangsu Province Case No.: (2020) Su 0981 Xingchu No. 600, (2021) Su 09 Xingzhong No. 421
Criminal offense of organizing and leading pyramid schemes, virtual currency, obtaining qualifications for purchasing coins, developing downlines, and speculating in pyramid schemes
In October 2018, defendant Chen Mouzhi and others jointly established an EOS ecological platform (hereinafter referred to as the EOS platform) pyramid marketing organization, and carried out pyramid marketing activities nationwide through the Internet using EOS coins as a carrier. The main publicity methods are the organization of on-site meetings, training, the establishment of WeChat groups, etc. In the name of providing value-added services for virtual digital currency, the platform advertises that it can obtain income through the distribution of EOS coins issued every year, carry trading, candy airdrops, system resource rental, project crowdfunding mortgage, and token holdings, but in fact, the platform does not have most of the above-mentioned profit methods. Participants need to pay 10-300 EOS coins to be eligible to join the platform. After members join, they form tiers in a certain order, and directly or indirectly use the amount of investment, the number of people to be developed, and the level of development as the basis for rebates, so as to induce participants to continue to develop others to participate. In addition to the static income according to the amount of EOS coins invested by themselves, each participant also obtains dynamic income according to the number of downlines and the amount of downline investment.
According to the forensic appraisal of a data forensic center in Shanghai, from October 20, 2018 to April 19, 2020, the EOS ecological platform had a total of 456133 member accounts, with 58 levels, and received a total of 52,456,878.725 EOS coins from members. According to the appraisal of the Price Determination Center of the Price Bureau of Dongtai City, Jiangsu Province, the minimum value of EOS coins during the period is 9.6893 yuan, and the value of the above EOS coins is 508270435 yuan based on this price.
The founders of the EOS platform are 9 defendants, including Chen Mouzhi, Ding Moudong, Ding Moudong, Li Mouyan, Yu Mou, Wang Moufei, Sun Mougang, Zhou Mouzheng, and Zhang Moulin, who are responsible for the operation, planning, training, publicity, daily management and coordination of the platform. After defendants Zhou Mouping, Chen Moujun, Chu Moujie, Wang Moulan, and Zhou Moulin joined, they actively participated in promotion and publicity, and developed members. The defendants illegally profited from the above-mentioned pyramid schemes.
On September 16, 2021, the Dongtai Municipal People's Court of Jiangsu Province rendered the (2020) Su 0981 Xing Chu No. 600 Criminal Judgment:
The defendants were sentenced to fixed-term imprisonment ranging from two years to five years and ten months for the crime of organizing and leading pyramid selling activities, and were also fined. The seized virtual currency shall be disposed of in accordance with law, and the funds and proceeds shall be confiscated in accordance with law and handed over to the state treasury. The stolen funds from the defendants, pyramid scheme participants, their relatives and friends, and so forth, shall be confiscated in accordance with law and turned over to the state treasury.
On November 23, 2021, the Intermediate People's Court of Yancheng City, Jiangsu Province, issued the (2021) Su 09 Xingzhong No. 421 Criminal Ruling: rejecting the appeal and upholding the original judgment.
The effective judgment of the court held that the issue of whether this case meets the constitutive elements of the crime of organizing and leading pyramid selling activities. The crime of organizing or leading pyramid marketing activities in the Criminal Law refers to the conduct of requiring participants to pay fees or purchase goods or services to obtain membership qualifications in the name of business activities such as selling goods or providing services, and forming hierarchies in a certain order, directly or indirectly using the number of recruits as the basis for remuneration or rebates, inducing or coercing participants to continue to recruit others to participate, defrauding them of property, and disrupting the economic and social order. In this case, the defendant required participants to purchase 10-300 EOS coins online to deposit on the platform to obtain the qualification to join, and the platform received static income according to its own recharge amount, and dynamic income according to its downline recharge amount and number of rechargers. The settlement method of income is EOS coins, and the source of income mainly depends on the number of downlines and the amount of investment in the downline, rather than the income from the rise and fall of the market price of EOS coins, and the EOS platform itself does not have most of the profit models it advertises, and basically relies on pulling people to develop downlines to maintain the operation of the platform. The acts of the defendants in this case should be found to be pyramid schemes. Second, according to the relevant regulations, personnel who play a role in initiating, planning, and manipulating pyramid marketing activities, and who are responsible for management, coordination, publicity, training, and other responsibilities, as well as other personnel who play a key role in the implementation of pyramid marketing activities and the establishment and expansion of pyramid marketing organizations, can be recognized as organizers and leaders of pyramid marketing activities. In this case, all the defendants met the above-mentioned requirements for the designation of "organizers and leaders". and 9 people, including defendant Zhang Moulin, are responsible for or participate in the daily operations and decision-making of the platform, and as core members of the platform, they shall be found to be the principal offenders. Finally, where pyramid marketing activities fabricate or distort state policies, fabricate or exaggerate business, investment, or service items and profit prospects, disguise the true sources of remuneration or rebates, or other fraudulent means, and carry out the conduct provided for in article 224-1 of the Criminal Law, and illegally profit from the fees paid by persons participating in pyramid selling activities or the fees for purchasing goods or services, it shall be found to be fraudulent acquisition of property. In this case, the EOS platform did not have most of the profitability advertised by the defendants, and mainly profited from the investments of the MLM participants. In summary, the acts of the defendants in this case are all in line with the criminal composition of the crime of organizing and leading pyramid selling activities.
With regard to the determination of the amount of unlawful gains, pyramid selling activities are not lawful business activities that require qualifications, but acts that are completely prohibited by law, and when calculating the amount of the crime, the expenses for the training and conference affairs of the pyramid sales personnel shall not be deducted, and the funds invested by the pyramid scheme participants shall be included in the amount of the crime if they are the property used in the crime of pyramid selling.
To sum up, the defendants Chen Mouzhi, Ding Moudong, Ding, Li Mouyan, Yu, Wang Moufei, Sun Mougang, Zhou Mouzheng, Zhang Moulin, Zhou Mouping, Chen Moujun, Chu Moujie, Wang Moulan, and Zhou Moulin require participants to pay 10-300 EOS coins for activation in the name of providing virtual digital currency value-added services on the platform, and form a hierarchy in a certain order, directly or indirectly based on the number of personnel developed, the amount of investment, The development level is used as the basis for rebates, inducing participants to continue to recruit others to participate, defrauding property, and disrupting economic and social order, where the circumstances are serious, constituting the crime of organizing and leading pyramid marketing activities. The case was a joint crime. Among them, defendants Chen Mouzhi, Ding Moudong, Ding Mouyan, Li Mouyan, Yu Mou, Wang Moufei, Sun Mougang, Zhou Mouzheng, and Zhang Moulin played a major role in the crime and were the principal offenders. Defendants Zhou Mouping, Chen Moujun, Chu Moujie, Wang Moulan, and Zhou Moulin played a secondary or auxiliary role in the joint crime, and are accomplices, and their punishment is commuted. Defendant Chu Moujie voluntarily surrendered and truthfully confessed the facts of the crime, and surrendered voluntarily, and was given a lighter punishment. Defendants Ding Moudong, Ding Mou, Sun Mougang, Zhang Moulin, Zhou Mouping, Chen Moujun, Wang Moulan, and Zhou Moulin truthfully confessed their crimes after they were brought into the case, and may be given a lighter punishment. Defendants Chen Mouzhi, Ding Moudong, Ding Mou, Li Mouyan, Yu Moufei, Wang Moufei, Sun Mougang, Zhou Mouzheng, Zhang Moulin, Zhou Mouping, Chen Moujun, Chu Moujie, Wang Moulan, and Zhou Moulin voluntarily admit guilt and accept punishment, and may be given a lenient disposition in accordance with law.
1. Where, after the actor establishes an online platform, in the name of providing virtual currency value-added services on the platform, requires the participant to purchase a certain amount of virtual currency to recharge the platform to obtain the qualifications to join, the platform does not have most of the profit models publicized by the actor, and mainly illegally profits from the investment of participants at all levels, and the settlement method for the participants to obtain the benefits is virtual currency, and the income mainly depends on the number of people in the downline and the amount of investment in the downline, rather than obtaining income from the rise and fall of the market price of the virtual currency, it shall be found to be a pyramid scheme.
2. Determination of the amount of unlawful gains from the crime of organizing and leading pyramid selling activities. When calculating the amount of the crime of pyramid selling, expenses such as for the training and conference affairs of the pyramid sales personnel shall not be deducted, and the funds invested by the participants in the pyramid scheme shall be included in the amount of the crime if they are assets used in the crime of pyramid selling.
3. On the disposal of the virtual currency involved in the case. In the crime of organizing and leading pyramid marketing activities targeting virtual currency, although investors other than the defendant were lured to join the platform and recharge to purchase virtual currency to obtain membership qualifications, in order to obtain higher returns, the investors continued to develop and go offline in accordance with the requirements of the platform, and let others continue to recharge and purchase virtual currency on the platform, which has made the investors become participants in the pyramid scheme, and they have not been punished because they have not met the standards for criminal punishment. Therefore, the virtual currency seized by the MLM platform will not be returned as the property of the victim.
II. Case of Wei XX Organizing and Leading Pyramid Selling Activities -- Determination of the criminal entity for the crime of organizing or leading pyramid selling activities
Warehousing No.: 2023-05-1-168-001 Trial Court: Bao'an District People's Court of Shenzhen, Guangdong Province, Intermediate People's Court of Shenzhen, Guangdong Province Case No.: (2010) Shen Bao Fa Xing Chu Zi No. 4546 and (2011) Shen Zhong Fa Xing Er Zhong Zi No. 294
Criminal Crime of Organizing and Leading Pyramid Selling Activities Targets of Crackdown Ringleaders Organizational and Leadership Roles
"Zhuhai Lin Mousheng Trading Co., Ltd." is a fake company that does not have any industrial and commercial registration materials in Zhuhai and actively engages in illegal pyramid marketing activities in Longhua Town, Bao'an District, Shenzhen under the pretense of an online chain. "Zhuhai Lin Mousheng Trading Co., Ltd." derived from "Zhuhai Chang Mousheng Trading Co., Ltd.", "Zhuhai Hemousheng Trading Co., Ltd." and other MLM companies, these companies determine the hierarchical status of these MLM personnel according to the number of MLM personnel in the company (including the sum of the number of downline and downline). The specific criteria for determining the level are: 1-2 people belong to the first-level distributors, 3-9 people belong to the second-level distributors, 10-59 people belong to the third-level distributors, 60-240 people belong to the fourth-level distributors, and more than 240 people belong to the fifth-level distributors. On the other hand, the MLM personnel (legal representatives and shareholders of the MLM company) of a registered MLM company must meet the qualifications of "Level 5 MLM" and be called the "president" of MLM. According to the internal regulations of the MLM organization, everyone who is developed into a MLM company must first pay 3,600 yuan to buy a "steel pot" or "ozone water dispenser" (if you don't want a steel pot or water dispenser, you can get 500 yuan back). After the joining personnel purchase the above-mentioned products, they will obtain the so-called "marketing rights" of the MLM organization, and can develop their downline personnel, so as to form a tight personnel network and obtain commissions from them. In addition, "the more downline development, the more commission" is used to lure new personnel to participate in pyramid marketing activities. Each person introduced to join the MLM company will receive a commission of 525 yuan, and the introduced person will become the introducer's downline; the downline will introduce another person, and the introducer will receive a commission of 175 yuan; the downline will develop another person, and the introducer will receive a commission of 350 yuan; and the downline will develop another person, and the introducer will get 280 yuan.
In 2006, the defendant Wei XX joined the "Zhuhai Lin Mousheng Trading Co., Ltd." through his direct online development of Zhang Mouyu, and engaged in pyramid marketing activities in Longhua Street, Bao'an District, in the name of carrying out business activities such as selling "steel pots" and "ozone water dispensers". After the development of the downline and the downline, Wei Moumou has become the legal representative of the MLM company Zhuhai Kang Mouyuan Trading Co., Ltd., which belongs to the fifth-level MLM, and uses the name of the MLM company to directly develop the downline and the downline of more than 241 people, with an illegal business turnover of at least 867,600 yuan. On August 12, 2010, public security officers arrested Wei Moumou.
On December 10, 2010, the Bao'an District People's Court of Shenzhen, Guangdong Province, rendered the (2010) Shen Bao Fa Xing Chu Zi No. 4546 Criminal Judgment: Defendant Wei XX committed the crime of organizing and leading pyramid selling activities, and was sentenced to two years imprisonment and fined 2,000 yuan. After the verdict was pronounced, Wei XX appealed. On February 21, 2011, the Intermediate People's Court of Shenzhen, Guangdong Province, rendered the (2011) Shen Zhong Fa Xing Er Zhong Zi No. 294 Criminal Ruling, rejecting the appeal and upholding the original judgment.
The effective judgment of the court held that the defendant Wei XX ignored national laws, organized and led pyramid marketing activities in the name of selling commodities and other business activities, requiring participants to pay fees or purchase commodities to obtain membership qualifications, and divided them into grades in a certain order, and directly or indirectly used the number of recruits as the basis for remuneration or rebates, luring participants to continue to recruit others to participate, defrauding property, and disrupting economic and social order, and his conduct constituted the crime of organizing and leading pyramid marketing activities. In view of the fact that Wei XX took the road of pyramid selling for the purpose of maintaining family life, he may be given a lighter punishment as appropriate.
In judicial practice, the criminal policy of blending leniency and severity should be implemented, and the scope of targets should be scientifically and reasonably delineated according to the status and role of the participants in pyramid selling activities:
Criminal punishment should be imposed on the ringleaders who played the role of organizing, planning, and leading in the establishment and expansion of pyramid marketing networks; those who are not the planners or initiators, but who actively join in the pyramid marketing activities carried out by them, and who play the role of organizing, leading, and backbone in the pyramid marketing activities carried out by them, should also be investigated for criminal responsibility; ordinary personnel participating in pyramid marketing activities may be dealt with through administrative punishment, education, dismissal, and other means, and it is not appropriate to pursue criminal responsibility.
III. Case of Su, Deng, and others organizing and leading pyramid sales activities -- Determination of principal and accessory offenders in the crime of organizing and leading pyramid sales activities
Warehousing No.: 2024-03-1-168-002 Trial Court: Bincheng District People's Court, Binzhou City, Shandong Province, Intermediate People's Court of Binzhou City, Shandong ProvinceCase No.: (2021) Lu 1602 Xingchu No. 342, (2022) Lu 16 Xingzhong No. 203
Criminal Crime of Organizing and Leading Pyramid Schemes Principal and Accessory
In 2019, the defendant Su established a company, built an APP platform, and formulated rules to set up five levels: ordinary members, distributors, gold medal dealers, partners, and performance shareholders in the name of promoting calligraphy and painting on the platform, providing calligraphy and painting agency sales services, and other business activities.
Upon the recommendation of others, you can register as an ordinary member on an APP platform; you can become a dealer by purchasing calligraphy and painting on the platform, obtain the qualification to recommend others, and enjoy 1% of the profit from selling calligraphy and paintings; the dealer directly recommends 5 members to become gold medal dealers, and enjoys a commission of 1‰ of the performance of the directly recommended members; the team of the gold medal dealer is full of 20 dealers in the 3rd floor of the downline, upgraded to a partner, and enjoys 1‰ of the member performance in the 3rd floor of the offline The partner directly recommends 3 people to become partners, and the team of 80 dealers is upgraded to a performance shareholder, enjoying a commission of 1‰ of the performance of the members within the 3rd floor of the downline, and receiving a car rewarded by the company.
After purchasing calligraphy and paintings, members can sell calligraphy and paintings on the platform within the specified time on the next day, and the selling price is 2% higher than the purchase price, and members need to pay a consignment fee of 1% of the purchase price to the platform first, and the platform will be sold on the next day, and the buyer will transfer the money to the account of the member who sells the paintings, and the transaction will be completed. When the price exceeds 5,000 yuan, the platform will split the calligraphy and painting into 3-5 small paintings and calligraphy with the same total price, and mail the calligraphy and painting of more than 5,000 yuan to the purchase member. Defendant Su, as the initiator and actual controller of the company and the platform, comprehensively manages the company and the platform, and induces others to participate in the promotion of the platform through offline promotion meetings and the Internet, developing a total of 27,072 members at 20 levels; Shareholders and platform performance shareholders, with defendant Deng as the company's shareholder and platform performance shareholder, and defendants Zhang Moumei, Wang, and Yang as platform performance shareholders, respectively promoted and publicized the platform through promotion meetings and Internet platforms such as Douyin and Kuaishou, to lure and develop others to participate.
On July 7, 2022, the Bincheng District People's Court of Binzhou City, Shandong Province, rendered the (2021) Lu 1602 Xingchu No. 342 Criminal Judgment, finding:
Defendant Su X was sentenced to seven years and six months imprisonment and fined RMB 500,000 for organizing and leading pyramid selling activities; defendant Xu X was sentenced to six years and six months imprisonment and fined RMB 400,000 for organizing and leading pyramid selling activities; Defendant Zhang X was sentenced to five years imprisonment and fined RMB 250,000 for organizing and leading pyramid selling activities; He was sentenced to four years imprisonment and a fine of 200,000 yuan; defendant Deng was sentenced to three years imprisonment and fined 150,000 yuan for organizing and leading pyramid selling activities; defendant Wang was sentenced to three years imprisonment with a three-year suspended sentence and fined 150,000 yuan; defendant Yang was sentenced to two years imprisonment with a two-year suspended sentence and fined 100,000 yuan. The unlawful gains of each defendant are to be recovered in accordance with law.
After the verdict was announced, the defendant Deng appealed. On September 29, 2022, the Intermediate People's Court of Binzhou City, Shandong Province, rendered the (2022) Lu 16 Xingzhong No. 203 Criminal Ruling, rejecting the appeal and upholding the original judgment.
The effective judgment of the court held that defendants Su, Xu, and Zhang organized and led the entire pyramid marketing organization to carry out pyramid marketing activities, played a major role in the joint crime, and were principal offenders; Zhang X and Xu X played a slightly smaller role than Su X X, and defendants Yang X X played a slightly smaller role than Zhang X Mei, and they are to be considered as appropriate in sentencing. Based on basic facts such as the status and role of each defendant in organizing and leading pyramid marketing activities, the number of recruits, and the circumstances of each sentencing, each defendant is to be given a differentiated sentence. Among them, Deng enjoyed 6% of the shares in the company, actually obtained 150,000 yuan in share dividends, and was located at the second level, actively developed personnel, developed 1,406 people on the 11th floor of the downline, and illegally withdrew 192,464.23 yuan from the platform; Therefore, the courts of first and second instance made the above rulings in accordance with law.
In the joint crime of organizing or leading pyramid selling activities, where the perpetrator did not play a role in initiating, planning, or operating the pyramid selling activities, nor did he bear duties such as management and coordination, but only organized and recruited personnel in some regions, it may be found to be an accessory on the basis of their position and actual role in the joint crime.
IV. Case of Luo XX Organizing and Leading Pyramid Selling Activities -- The defendant's loss of investing funds in organizing and leading pyramid selling activities does not affect the determination of the nature of his conduct
Warehousing No.: 2024-03-1-168-001 Trial Court: Yifeng County People's Court of Jiangxi Province, Intermediate People's Court of Yichun City, Jiangxi Province Case No.: (2021) Gan 0924 Xingchu No. 342, (2022) Gan 09 Xingzhong No. 41
Criminal Crimes: Organizing and Leading Pyramid Schemes, Online Pyramid Schemes, Virtual Currency, Loss of Funds
A network technology company develops an APP, and engages in virtual currency acceptance business by absorbing members, and members are divided into social workers, supervisors, managers and other levels from the bottom to the top, and the superior manager "Yi" and others often give online lectures to members. The platform stipulates that after the old member recommends the new member to register an account, the new member pays 100 yuan to activate the account, and the members form the upper and lower lines in accordance with the order of recommended development, and the platform will rebate in the form of virtual currency according to the number of development downlines and the amount of investment. From January to May 2021, the defendant Luo Moumou was introduced to register as a member, and in order to get more benefits for his promotion, he directly or indirectly developed more than 30 people downline, with a level of 3 or above, and the total investment of team members was more than 80 yuan, with a loss of at least more than 30 yuan, and Luo Moumou himself lost more than 10 yuan.
On December 29, 2021, the People's Court of Yifeng County, Jiangxi Province, rendered the (2021) Gan 0924 Xingchu No. 342 Criminal Judgment, finding that the defendant Luo Moumou was guilty of organizing and leading pyramid marketing activities, and sentenced him to one year and two months imprisonment and a fine of RMB 20,000. After the verdict was announced, Luo Moumou was dissatisfied and appealed. On February 10, 2022, the Intermediate People's Court of Yichun City, Jiangxi Province, rendered the (2022) Gan 09 Xingzhong No. 41 Criminal Ruling, rejecting the appeal and upholding the original judgment.
The effective judgment of the court held that the defendant Luo Moumou, in the name of accepting virtual currency, required participants to obtain membership qualifications by paying fees, formed more than 30 participants into a level of level 3 or above in a certain order, and directly or indirectly used the number of development personnel as the basis for remuneration or rebates, inducing participants to continue to recruit others to participate, defrauding property, and disrupting the economic and social order, and his conduct constituted the crime of organizing and leading pyramid marketing activities. With regard to the opinion that Luo Moumou and his defender mentioned that Luo Moumou did not organize and lead pyramid marketing activities, nor did he use the number of development personnel as the basis for rebates, did not make actual profits, and his behavior did not constitute the crime of organizing and leading pyramid marketing activities, after investigation, Luo Moumou understood the pyramid marketing model, and in order to obtain high rewards, actively develop new members, and have the ability to participate in the organization, Intentional leadership of pyramid marketing activities; Luo Moumou through the development of new members, obtain virtual currency rewards, and after the development of a certain number of new members to obtain membership level promotion, from the management team to obtain additional rewards, the number of direct or indirect development personnel is the basis for Luo Moumou to obtain rebates; combined with the number and level of Luo Moumou's development team personnel, he should be convicted and punished in accordance with the crime of organizing and leading pyramid marketing activities, because the pyramid marketing organization's capital chain is broken, Luo Moumou's own investment funds have not been recovered, does not affect the determination of the nature of his conduct. Therefore, the first and second instance judgments were made as above.
In the name of promoting goods, the defendant's participation in the organization and leadership required participants to pay fees to obtain membership qualifications, and formed hierarchies in a certain order, directly using the number of recruits as the basis for rebates, to induce participants to continue to recruit others to participate, and directly or indirectly recruited 30 or more downline personnel and the level was level 3 or above, and his conduct was fully in line with the "Opinions of the Supreme People's Court and One Supreme People's Court on Several Issues Concerning the Application of Law in Handling Criminal Cases of Organizing and Leading Pyramid Selling Activities" With regard to the relevant provisions on the determination of the level and number of pyramid selling organizations, criminal responsibility shall be pursued in accordance with the crime of organizing and leading pyramid selling activities. Where losses occur due to the rupture of the pyramid marketing organization's capital chain, it does not impact the determination of the nature of the conduct.
V. Cases of Illegal Business Operations by Zeng XX et al. -- Handling when organizing and leading pyramid selling activities has not yet reached the standards for filing and prosecuting cases for the crime of organizing or leading pyramid selling activities
Warehousing No.: 2023-05-1-169-002 Trial Court: Luohu District People's Court of Shenzhen, Guangdong Province, Intermediate People's Court of Shenzhen, Guangdong Province Case No.: (2011) Shen Luo Fa Xing Yi Zhong Zi No. 1, (2011) Shen Zhong Fa Xing Er Zhong Zi No. 619
Criminal Crime of Illegal Business Operation, Crime of Organizing and Leading Pyramid Selling Activities, Criteria for Filing and Prosecution
Beginning in June 2009, the defendant Zeng XX leased Room 3205, Block A, a building in Luohu District, Shenzhen, Guangdong Province as a temporary business premises, and developed a downline in the name of Liang Mousi Group (Hong Kong) Co., Ltd. as a development dealer, using high feedback as a bait to promote MLM products to others and publicize the MLM bonus system. At the same time, Zeng XX organized and planned pyramid schemes, tricked others into joining, demanded that the recruited personnel pay membership fees, obtained the qualifications to join and develop other personnel, and required the recruited personnel to recruit other personnel to join, and calculated and paid remuneration based on the performance of the development members of the lower line, so as to obtain illegal benefits; Mo Moumou participated in MLM training in the above-mentioned places, and actively developed the downline, acted as an agent for the downline or directly brought the downline to Liang Mousi Group (Hong Kong) Co., Ltd. to pay the fee to join the club, conduct transactions, and form a pyramid marketing network:
Among them, Zeng Moumou's downline personnel include Zheng Mouni, Yang Mouxiang, Wang Moujun, Yang Moufang, Yuan Mouxia and others, Yang Moufang paid 20,000 yuan to Zeng Moumou's upline Zeng Mouru (the currencies not indicated below are RMB), Yuan Mouxia successively paid a total of 62,000 yuan to Zeng Moumou, Zeng Mouru and Zeng Moumou's brother Zeng Moujian; Mo Moumou and Gong Mouling respectively purchased HK$5,000 products from them; Luo Moumou developed Huang Moumei as the downline, Huang Moumei developed Wang Mouhua as the downline, Huang Moumei and Wang Mouhua respectively paid a membership fee of HK$67,648 to Liang Mousi Group (Hong Kong) Co., Ltd.; Mo Moumou developed Long Mouyu as the downline, Long Mouyu developed Zhong Mouxian as the downline, Zhong Mouxian developed Zhou Mouhua as the downline, of which Long Mouyu purchased HK$5,000 products from Mo Moumou, Zhong Mouxian, Zhou Mouhua paid a membership fee of HK$67,648 to Liang Mousi Group (Hong Kong) Co., Ltd. respectively.
On December 8, 2009, after receiving reports from the masses, the public security organs, together with the Luohu Branch of the Shenzhen Municipal Administration for Market Regulation, seized Zeng XX, Huang XX, Luo XX, Mo XX and others who were active in Room 3205, Block A, a building in Luohu District.
On March 25, 2011, the Luohu District People's Court of Shenzhen, Guangdong Province, rendered the (2011) Shen Luo Fa Xing Yi Zhong Zi No. 1 Criminal Judgment: Defendant Zeng XX was sentenced to one year and six months imprisonment, suspended for two years, and fined 1,000 yuan for the crime of illegal business operation, and defendants Huang XX, Luo XX, and Mo XX were exempted from criminal punishment for the crime of illegal business operation. After the verdict was announced, the defendant Zeng XX appealed. On May 27, 2013, the Intermediate People's Court of Shenzhen, Guangdong Province, rendered the (2011) Shen Zhong Fa Xing Er Zhong Zi No. 619 Criminal Judgment: revoking the (2011) Shen Luo Fa Xing Yi Zhong Zi No. 1 Criminal Judgment of the Shenzhen Luohu District People's Court;
The effective judgment of the court held that the acts of the appellant Zeng XX and the defendants Huang XX, Luo XX, and Mo XX in the original trial should be found to be organizing and leading pyramid marketing activities, and should not be convicted and punished for the crime of illegal business operation. In view of the fact that the available evidence cannot prove that the conduct of Zeng XX, Huang XX, Luo XX, and Mo XX has reached the prosecution standard for the crime of organizing and leading pyramid selling activities, their conduct should not be punished as the crime of organizing and leading pyramid selling activities. Zeng Moumou appealed that Liang Mousi (Hong Kong) Co., Ltd. had real commodity business activities, and its behavior did not constitute the crime of illegal business operation, nor did it meet the standard for filing and prosecuting the crime of organizing and leading pyramid marketing activities, and the grounds for appeal were established.
If the conduct of organizing or leading pyramid selling activities does not meet the prosecution standards for the crime of organizing or leading pyramid selling activities, the perpetrator does not constitute the crime of organizing or leading pyramid selling activities, and it is not appropriate to pursue criminal responsibility for the crime of illegal business operation.
6. The case of fund-raising fraud by Chen XX and Wang XX -- the characterization of defrauding unspecified public property by means of pyramid schemes
Warehousing number: 2023-03-1-134-001Trial court: Chongqing Fourth Intermediate People's Court, Chongqing High People's CourtCase No.: (2017) Yu 04 Xing Chu No. 26, (2019) Yu Xing Zhong No. 29
Criminal Crime of Fund-raising Fraud Crime of Organizing and Leading Pyramid Selling Activities Competing Laws and Regulations Illegal Possession Purpose
On May 30, 2012, the defendant Chen Moumou registered and established a dragon company in Pengshui Miao Tujia Autonomous County, Chongqing City, with a registered capital of 10 million yuan, which was borrowed from someone and withdrawn after capital verification, and Chen Moumou relied on private loans to maintain the operation of the company. In 2015, Chen Moumou, together with the defendant Wang Moumou, fabricated false facts such as the imminent listing of a dragon company when he knew that a dragon company owed a large amount of foreign debts and had no profit-making projects, promised that the funds were guaranteed, and formulated a pyramid scheme with high rebates as bait, that is, to openly recruit agents in the name of a dragon company, which were divided into quasi-agents, formal agents, county-level managers, prefecture-level managers, Five levels of the marketing director group, participants pay 900 yuan to join the fee to become a quasi-agent of a dragon company, you can get a rebate of 450 yuan per month, three months in a row, in addition to a dragon company commodity agency rights, project promotion rights and gift of equity, agents at all levels can develop downline, and directly or indirectly develop the number of subordinate agents as the basis for promotion level, remuneration and rebates, formal agents above the level can get subsidies ranging from 4,200 yuan to 12,000 yuan per month. According to statistics, more than 300,000 people participated in illegal pyramid marketing activities, and actually collected more than 300 million yuan in franchise fees, more than 170 million yuan in rebates, more than 7.16 million yuan in operating costs, and more than 160 million yuan in intercepted funds, most of which were privately divided by Chen and Wang.
On September 26, 2018, the Chongqing No. 4 Intermediate People's Court rendered the (2017) Yu 04 Xing Chu No. 26 Criminal Judgment:
1. Defendant Chen XX committed the crime of fundraising fraud and was sentenced to life imprisonment, deprivation of political rights for life, and confiscation of all personal property. 2. Defendant Wang XX committed the crime of fundraising fraud and was sentenced to 15 years imprisonment and a fine of 500,000 yuan. 3. The property obtained from crime shall be recovered.
After the verdict was announced, Chen and Wang appealed. On March 20, 2019, the Chongqing Municipal High People's Court rendered the (2019) Yu Xing Zhong No. 29 Criminal Ruling: rejecting the appeals of Chen and Wang and upholding the original judgment.
The effective judgment of the court held that the focus of the dispute in this case was how to determine the nature of the acts of the defendants Chen and Wang. In the name of recruiting agents of a dragon company, Chen Moumou and Wang Moumou required participants to pay a franchise fee to obtain the qualifications to join, and formed five levels in a certain order, using the number of development personnel as the basis for rebates, luring participants to continue to develop others to participate, defrauding property, the number of participants was as high as more than 300,000 people, and the franchise fee was collected for a total of more than 300 million yuan, and the behavior of the two met the constitutive elements of the crime of organizing and leading pyramid marketing activities. Chen Moumou and Wang Moumou, as the planners, organizers, and leaders of pyramid marketing activities, knew that a certain dragon company owed a large amount of foreign debts and had no profit-making projects at all. False facts such as the guarantee of franchise funds, the use of pyramid schemes to raise funds to the public, within three months to pay 1.5 times the franchise fee rebates and other subsidies, etc., the mode of operation is obviously not sustainable, more than 300 million yuan of the raised income of more than 7.16 million yuan for operation, more than 170 million yuan for rebates, most of the intercepted more than 160 million yuan was privately divided by the two, which shows that the two have the purpose of illegal possession, and the behavior of the two meets the constitutive elements of the crime of fund-raising fraud. Chen XX and Wang XX used pyramid selling methods to carry out the crime of fundraising fraud, and at the same time constituted the crime of organizing and leading pyramid selling activities and the crime of fundraising fraud, and shall be found and punished as the crime of fundraising fraud with a heavier punishment, that is, the crime of fundraising fraud. Therefore, the first and second instance judgments were made as above.
The crime of organizing and leading pyramid selling activities and the crime of fundraising fraud are not antagonistic or exclusionary, and the two may compete and coincide. Where pyramid marketing methods and fraudulent methods are used to illegally raise funds for the purpose of illegal possession, and both the crime of organizing or leading pyramid selling activities and the crime of fundraising fraud are constituted, one of the felonies shall be convicted and punished as the crime of fundraising fraud.
Reprinted from: Li Xu's anti-fraud team official account, only for learning and discussion, such as invasion and deletion, thank you.