|The Ministry of Public Security investigation police have arrested seven members of multi level marketing firm Lien Ket Viet for alleged fraudulent appropriation of assets in an apparent pyramid scheme. — Photo vnexpress.net
HA NOI (VNS) — The Ministry of Public Security investigation police have arrested seven members of multi level marketing firm Lien Ket Viet for alleged fraudulent appropriation of assets in an apparent pyramid scheme.
Management board chairman Le Xuan Giang and deputy general director Nguyen Thi Thuy were among the arrested.
The seven members of Lien Ket Viet, or the Viet Nam commercial production joint stock company, were arrested on Saturday in Ha Noi alledgedly for swindling over 45,000 people and appropriating a total of VND1.9 trillion (roughly US$85 million) since 2014.
Since late 2015, reports have been submitted to the Ministry of Public Security referring to the leaders of the company and many of its branches failing to pay commissions to their clients in accordance with their agreements.
Hundreds of people said they paid deposits to join the Lien Ket Viet multi-level trading system but never received any commission as promised.
The people, investors and members of the company, said they went to the company offices based in Ha Noi and Hai Phong to ask for compensation but found it was closed.
Investigations found that the company was established in 2010 and obtained a multi-level marketing license from the Ministry of Industry and Trade in 2014. Since then, it focused on marketing and trading a variety of supplementary products and healthcare devices under a pyramid scheme.
The company was found to be fraudulent after it advertised as belonging to the Ministry of National Defence to win the confidence of customers.
The company's products, mostly fake, were sold at high costs compared to real products.
Police also found the company had forged many documents including certifications for outstanding services.
Giang and his group had tried to develop his company throughout the country focusing on rural areas where they were easily to dupe poor people into investing and becoming a member of the company.
Between early 2014 and July 2015, about 21 branches opened in 19 provinces and over 45,000 people joined the company.
Giang and Thuy instructed employees to recruit sellers by promising lucrative bonuses. Each seller was asked to deposit at least VND8.6 million ($386) to join the system.
Investigators said the company's leaders managed to expand their network by using deposits from new sales agents to old ones and repeating that cycle.
The clients were promised a sum of VND449 million ($20,093) including commissions, interest, and bonuses after five years, and the amount would be increased if they could find new participants. The company's current account worth VND45.5 billion ($2 million) has been frozen for further investigations, according to the police.— VNS