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Protests erupt in Beijing after arrest of self-proclaimed ‘charity’ founder for fraud

Unlikely protests erupted in the Chinese capital on Monday following the arrest of the founder of self-proclaimed charitable company Shanxinhui on suspicion of fraud.

Update: Beijing police calls rally supporting self-proclaimed charity ‘illegal’ as protesters reportedly sent away

Hong Kong’s Oriental Daily cited a participant in the protest as claiming that as many as 60,000 people demonstrated outside Beijing’s Dahongmen International Convention Exhibition Centre and the Supreme People’s Procuratorate. Several Chinese Twitter users have cited similar figures.

Protesters were filmed sitting on the streets amid a moderate police presence, waving Chinese flags, shouting “long live the Communist Party,” and singing the Chinese national anthem.

Videos posted on Twitter suggest that demonstrators began petitioning the authorities in Beijing over the weekend, with police taking petitioners away on large coaches.

Pyramid scheme?

Last Friday, Chinese state news agency Xinhua announced the arrests of several individuals associated with Guangdong Shenzhen Shanxinhui Culture Communication Co Ltd, including founder Zhang Tianming, on suspicion of organising a pyramid scheme.

charity pyramid ponzi scheme fraud

Zhang Tianming. Photo: Shanxinhui website.

“A preliminary investigation indicates that Zhang and others are suspected of using ‘alleviating poverty and distributing wealth’ as a front to plan, manipulate and lead members to join pyramid scheme activities, defrauding [them] of a large amount of wealth,” read the Xinhua statement.

A Shanxinhui member interviewed by Hong Kong’s RTHK claimed that people who made donations to the company would, in turn, receive larger sums of donations from other members, thereby reaping a profit. However, the member said that he donated his money voluntarily, and denied he was participating in a pyramid scheme.

A graphic on an archived version of Shanxinhui’s now-defunct website indicates that “extremely poor” members who invested between RMB 1,000-3,000 (HK$1,150 – HK$3,470) into the company were promised donations from other members which were RMB 500-1,500 (HK$578 – HK$1,734) greater than their original investment. The figure represented a profit of 50 per cent within a period of seven to ten days.

Shanxinhui Charity Fraud Ponzi Pyramid Scheme

Graphic on Shanxinhui’s now-defunct website.

“Rich” members who invested RMB 50,000-300,000 (HK$57,826 to HK$346,958) were promised a 10 per cent profit on their original payment within a period of 15 to 45 days.

Hong Kong’s Apple Daily reported on Monday that demonstrators had gathered to protest against the government’s investigation into Shanxinhui, which had resulted in the freezing of funds that a petitioner claimed “were being used to support the poor and disabled across the country.”

Demonstrators called for the release of Zhang and the other Shanxinhui executives.

The newspaper also reported that rumours spread earlier in the year claiming that officials in the city of Yongzhou, Hunan province had blackmailed Shanxinhui, threatening to label the company a pyramid scheme if it did not pay them RMB 20 million (HK$23 million). However, Yongzhou’s Communist Party committee denied the rumours in a Weibo post last month.

Search results relating to Zhang’s arrest can still be viewed on China’s Twitter-like Weibo platform, but no reports of Monday’s protests are viewable.

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Protests erupt in Beijing after arrest of self-proclaimed 'charity' founder for fraud