The traditional Chinese medicine provider Quanjian had been fined with 100 million Chinese Yuan or 14.4 million USD. The Tianjian district found the company guilty of organizing and leading a prohibited pyramid scheme.
Last Wednesday, China's Tianjian Municipality condemned the Chinese health product company Quanjian Nature Medicine Technology Development Co., Ltd. for organizing and leading a prohibited pyramid scheme in marketing its health products across the country, reported Xinhua.
The company was fined with 100 million Chinese Yuan while its founder and Chairman Shu Yuhui were sentenced to nine years in prison with a fine of 50 million Chinese Yuan.
The People's Court of Wuqing District of Tianjian also sentenced 11 other defendants working for the company with six years of jail time and corresponding fines. All of the accused also pleaded guilty to all the accusations in court.
The Tianjian-based company allegedly organized and led a pyramid scheme by using false advertising and cheated several individuals to invest money on its health products. It was proven that the healthcare product maker urged the victims to invest their savings in the pyramid scheme.
The official verdict of the case was also announced on the People's Court of Wuqing District of Tianjin's Weibo account. Since then, reporters had been seeking a response from the company but to no avail.
The Chinese authorities then announced that it would be investigating more health product makers operating in China after allegations against Quanjian were proven true. Chinese agents were said to launch a nationwide campaign and explore whether other entities follow the pyramid scheme in other regions of China.
The allegations against the company started when a young girl with cancer was correlated to the company through an online article. It was revealed that the traditional Chinese medicine firm administered its products for her and falsely claimed that the company's products could treat cancer.
Shu was already arrested after the release of the article. The issue also sparked controversy as it spread throughout social media.
According to Channel News Asia, the traditional Chinese medicine maker lured its clients with large-value rewards upon purchasing its healthcare products. It was also revealed that such products were overpriced, falsely advertised, and recruited more agents to do the same since 2007.
It was explained that pyramid schemes are illegal because it makes money by recruiting members who would then need to pay fees to sell the company's products to others. It was declared illegal by the court because the source of income should be based on the products being sold and not from recruiting others to sell the products.
