Beijing police said on Wednesday that 67 members of the pyramid investment organization Shanxinhui have been detained for disturbing social order after their illegal gathering in the streets on Monday.
"Whether the members of Shanxinhui gathered in Beijing were investors or supporters, they should have trusted the law and resorted to legal means instead of gathering in the street," Zhi Zhenfeng, a legal expert at the Chinese Academy of Social Sciences, told the Global Times.
The Xinhua News Agency reported on Tuesday that Beijing police are investigating some members of Shanxinhui, a company suspected of organizing and leading a pyramid scheme, after they gathered in Beijing on Monday.
Police said the gathering was illegal and those who incite, organize and participate in illegal gatherings in China will be punished.
The illegal gathering happened after Zhang Tianming, the company's legal representative, and others were put under "coercive measures" on suspicion of organizing and leading a pyramid scheme.
Police accused Zhang and others of plotting, manipulating and persuading people into taking part in a pyramid scheme disguised as a charity for the poor, and swindled them out of huge amounts of money.
"If they really wanted to protest, they should apply for it according to the Law on Assemblies, Processions and Demonstrations, otherwise the gathering is illegal," Zhi said, noting that in a legal society, the judicial departments have the right to deal with each citizen who violates the law.
"Shanxinhui mainly targeted people without higher education from rural areas or small cities, who are easy to be misled," Wu Fatian, a law professor with the China University of Political Science and Law, told the Global Times.
"Shanxinhui acts in the name of charity and poverty alleviation, so some people believed they could be rewarded while doing charity," Wu said.
Shanxinhui was founded in 2013 and is based in Shenzhen of Guangdong Province and Sanya of Hainan Province in South China, according to the Hainan-based news website hinews.cn.
Beijing-based Legal Weekly in May reported that Shanxinhui members should first transfer money to Shanxinhui as "donation" and then wait for receiving the money back.
"When you donate 3,000 yuan (4), you could make a profit of 800 yuan in half a month," said a member of Shanxinhui, the Legal Weekly reported.
The members could also receive benefits by introducing new members to the organization.
According to Wu, Shanxinhui is a pyramid scheme that had been offering rewards to the previous members with the money from later members.
In June, Wu wrote a post to expose Shanxinhui on WeChat public platform and then sent a report on it to the Ministry of Public Security.
"Illegal fund-raising and pyramid sales happen in many countries. The US, where the pyramid scheme originated, also cracks down on it," Wu noted.
A lack of investment channels and low profits in traditional industries have prompted people to look for new avenues to get rich overnight, which is taken advantage of by fraudsters, Wu said, calling for strengthening measures to crack down on these schemes and educate the public.
"When the organizations that attempt to control their members' minds like Shanxinhui grow big, the authorities need to strengthen control with harsher means, and they may make some political appeals," said Liu Ge, a CCTV commentator on economics.