Auction low and sell high, and you can make a profit every time? Uncover the pyramid scheme traps behind the calligraphy and painting auction

Entrust a network technology company to customize the calligraphy and painting auction website, and set the original price of less than 200 yuan for calligraphy and painting to set a minimum auction price of 2,000 yuan, and attract members to snap up with a gimmick of 3% a day. In just 4 months, this MLM organization has developed 16 levels of downline members in the way of online calligraphy and painting, more than 5,000 offline member accounts, and the amount of calligraphy and painting transactions by members is as high as 560 million yuan. Recently, after the Longwan District Procuratorate of Wenzhou City, Zhejiang Province initiated a public prosecution, the Longwan District Court made a first-instance judgment on the last defendant involved in the case for the crime of organizing and leading pyramid marketing activities. So far, all 28 defendants in this new type of network pyramid scheme case have been sentenced.

Wholesale low-cost calligraphy and paintings, packaged into high-priced collections

In April 2022, Li, a resident of Longwan District, Wenzhou City, who was idle at home, joined a "calligraphy and painting snapping" group, and saw that someone was "making millions a day", and Li, who was just here to "have fun", felt that he had found a "business opportunity". The so-called "calligraphy and painting snapping" is to attract members to snap by creating the illusion that the price of calligraphy and painting is rising, and the platform charges transaction fees.

After a basic understanding of the operation mode of "calligraphy and painting shooting", Li was unwilling to accept that he was just a player in this "game", and was determined to become a "dealer" and prepare to "make a big profit".

Subsequently, Li found his friend Ji and told him about the operation mode of "calligraphy and painting shooting". In the face of this "steady profit and no loss" business, Ji readily agreed to join, and the two agreed that Li would be responsible for the development of the membership market, the opening of the calligraphy and painting auction branch and other operational work, and Ji was responsible for docking platform software development, data maintenance, rental servers and other technical work.

In order to look more "reliable", Ji specially registered a company, applied for a business license, and entrusted a third-party network technology company to customize calligraphy and painting snapping websites and apps. Li promoted the so-called celebrity calligraphy and painting online and offline to have a high appreciation space, organized members to carry out offline activities many times, and let "professional lecturers" teach members to attract more people to join.

In July of the same year, Li bought more than 1,000 calligraphy and paintings wholesale at a price of less than 200 yuan each. Under the packaging of Li and others, these low-priced calligraphy and paintings were "transformed" on the auction platform and became "artworks" with a starting price of 2,000 yuan. In order to create a snap-up effect, the platform set a daily increase of 3% for each calligraphy and painting as a gimmick for snapping auctions, and charged 1.7% of the transaction price as a transaction fee.

Due to the daily increase of calligraphy and painting by 3%, when the price of a single calligraphy and painting rose to 7,000 yuan or more, Li was worried that the price of calligraphy and painting was too high and no one auctioned, so he would split the high-priced calligraphy and painting into a number of calligraphy and paintings with a starting price of 2,000 yuan and bid again.

In order to allow members to develop more downlines, the platform has set up direct promotion awards and team awards, and the number of direct invitees reaches more than 3 or the number of downline members reaches more than 16, and different commission rewards will be obtained. There are different levels of members, the more members are developed, the higher the level, and after the number of members reaches a certain number, you can even open a branch library and become the branch director to get dividends.

At the end of August 2022, Ms. Xue was introduced by a friend and became a member of this calligraphy and painting auction platform. However, after tasting the "sweetness" a few times, Ms. Xue found that no one took over the calligraphy and paintings that she had spent tens of thousands of yuan to "grab", and soon after, the platform also issued a statement on closure and maintenance. Realizing that she had been deceived, Ms. Xue reported the case to the police. Since then, the public security organs have filed cases for investigation against Li and seven others on suspicion of organizing and leading pyramid schemes.

Filing and supervision, and killing the backbone of pyramid schemes in one net

In March 2023, the public security organs transferred the case to the Longwan District Procuratorate for review and prosecution. After a preliminary review of the case file, the procurator found that this new type of network pyramid scheme case was full of difficulties.

"Different from the traditional pyramid marketing model, the members of this platform did not pay the entrance fee, and at the same time had real calligraphy and paintings as the subject of the transaction, and Li and Ji refused to admit guilt after arriving at the case. In this regard, we focus on the essential characteristics of 'pulling people's heads' pyramid schemes, guide the public security organs to supplement the collection of evidence, build a rigorous evidence system, and finally determine the relevant criminal facts. Wang Ying, the prosecutor in charge, recalled.

Li and Ji have a strong sense of anti-investigation, and have migrated and deleted server data many times before the case, resulting in a lot of key data missing from the background server, how to restore all the facts in the incomplete data? With such doubts, the prosecutor tried to use big data thinking to re-examine the electronic data, collide and match the user transaction information flow of the server background data with the capital flow of the third-party payment platform and the bank account capital flow, and combined with objective evidence such as WeChat chat records and audit reports, and gradually deduced the organizational operation model, transaction amount and profit amount of the pyramid scheme gang.

"The calligraphy and painting in this case, on the surface, is the subject of the transaction, but in fact it is a prop to cover up illegal activities, and the calligraphy and painting on the platform is set to increase by 3% per day, but new users are required to participate in the transaction to maintain the model, otherwise it will collapse, which is in line with the characteristics of making profits through the development of downlines, and is essentially still a 'drum and flower' type pyramid scheme crime." Wang Ying told reporters.

As the facts of the entire case surfaced, and the complex hierarchical relationship between personnel and their true identities gradually became clear, the prosecutor followed the flow of funds and user information, carried out their own supplementary investigation in accordance with the law, and gradually ascertained the true identities of the branch library director, head of the regiment, management personnel, technical personnel and others hidden behind the virtual ID, and successively supervised the public security organs to file and investigate 25 key members of the pyramid marketing organization.

Combine leniency and severity, and strengthen the recovery of stolen goods and losses

After investigation, from May to September 2022, 32 people, including Li and Ji, developed 16 levels of downline members through the calligraphy and painting snapping platform, with more than 5,000 offline member accounts, the amount of calligraphy and painting transactions by members was as high as 560 million yuan, and the platform made illegal profits of more than 15 million yuan.

In order to accurately and promptly punish the crime, the procurator handling the case took the initiative to listen to the defender's opinions, strengthened the interpretation of the law and reasoning in response to the defender's questions about the facts, evidence, and characterization of the crime, and actively guided the criminal suspects to return the stolen goods and make restitution, and in the end, 31 criminal suspects signed a plea affidavit and voluntarily withdrew more than 1.06 million yuan of illegal gains.

From August 25, 2023 to April 30 this year, the Longwan District Procuratorate successively prosecuted 28 suspects in the case on suspicion of organizing and leading pyramid schemes, and the other 4 people made a relative decision not to prosecute due to minor circumstances. As of July 26, the court held an open court hearing, adopted the facts of the crime and sentencing recommendations charged by the procuratorate, and made a guilty verdict on 28 defendants, of which Ji was sentenced to six years in prison and fined 120,000 yuan; Li was sentenced to five years and eight months in prison and fined 110,000 yuan.

(Source: · Rule of Law News Edition of the Procuratorate Daily Author: Fan Yuehong Yang Ming)