The pyramid scheme hearing has concluded. Are Zhang Ting and Tao Hong not yet finished?
[4] Compiled from: Red Star News
On November 7, the four-day hearing on the case involving Zhang Ting, Tao Hong, and others suspected of online pyramid schemes concluded in Shijiazhuang, Hebei Province. The case has not yet reached a verdict.
It is worth noting that at this hearing, there was a key whistleblower —— Ms. Li, whose husband, Zhu, was once an agent for the brand “TST Tingmimi.” He was sentenced to seven years in prison in a criminal case involving “TST Tingmimi.”
Case review
In November 2020, Zhu discovered a loophole in the settlement process between the shopping software platform "Tingmimi," operated by Daerwei Company, and Alipay while making a purchase. Simply put, if an order was canceled on the "Tingmimi" platform but payment continued through Alipay, the transaction would be deemed successful, while the cash coupon on the "Tingmimi" platform, which should have been consumed, would be returned to the personal account due to the order cancellation.
After discovering the vulnerability, from November 2020 to January 2021, Zhu used multiple accounts and cash coupons (worth approximately 20,000 yuan) under his control to place 1,123 malicious orders, actually paying 917,400 yuan but obtaining goods worth 5,654,700 yuan, illegally profiting 4,716,300 yuan.
After the incident, the public security organ lawfully seized 3,453 items of goods from Zhu and returned them to Dalwei Company. Zhu's relatives compensated Dalwei Company 1 million yuan on his behalf and obtained a letter of forgiveness.
The court held that Zhu, with the intent of illegal possession, defrauded 4.7163 million yuan during the signing and performance of a contract (the contract in question being a commodity sales contract), and his act constituted the crime of contract fraud. After committing the crime, Zhu voluntarily surrendered himself, truthfully confessed his offenses, pleaded guilty and accepted punishment voluntarily, and had already compensated Dalway Company 1 million yuan and obtained its forgiveness, so a lenient punishment was granted at the court’s discretion.
In the end, Zhu was sentenced to seven years' imprisonment and a fine of 500,000 yuan for contract fraud, and was ordered to compensate Dalway Company for its remaining economic losses.
"Criminal Law of the People's Republic of China"
Article 224 [Contract Fraud]
Whoever, for the purpose of illegal possession, commits any of the following acts in the course of concluding or performing a contract, thereby defrauding the other party of property in a relatively large amount, shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention, and shall also, or shall only, be fined; if the amount is huge or there are other serious circumstances, the offender shall be sentenced to fixed-term imprisonment of not less than three years but not more than ten years, and shall also be fined; if the amount is especially huge or there are other especially serious circumstances, the offender shall be sentenced to fixed-term imprisonment of not less than ten years or life imprisonment, and shall also be fined or have property confiscated:
(1) concluding a contract in the name of a fictitious unit or in the name of another person;
(2) using forged, altered, or invalidated bills or other false property certificates as guaranty;
(3) having no actual ability to perform, luring the other party into continuing to conclude and perform contracts by performing a small-amount contract or partially performing a contract;
(4) Absconding after receiving the goods, payment, advance payment, or collateral property given by the other party;
(5) Obtaining the property of the other party through other fraudulent means.
[1] The author's perspective
The Zhang Ting company pyramid scheme incident has been widely discussed for several years, yet no conclusion has been reached to this day. From product quality issues to agents reporting its business model as a pyramid scheme, various other cases have emerged. Although Zhu in this case is charged with contract fraud, unrelated to pyramid schemes, the definition of the funds involved is closely tied to whether Zhang Ting’s company is a pyramid scheme. If Zhang Ting’s company is indeed a pyramid scheme, its assets are not protected by law; if not, they are legally protected. Thus, whether Zhang Ting’s company is deemed a pyramid scheme is decisive for many related cases.
Since Zhang Ting’s company has not yet been officially identified as a pyramid scheme, with only the acceptance notice and case filing form from the Shijiazhuang Yuhua District Market Supervision Administration as evidence, and no supporting legal documents from relevant administrative or judicial authorities, the court in Zhu’s contract fraud case ruled that it cannot be concluded that Darwei Company is involved in administrative violations or crimes, nor can it be determined that its property rights lack legality. Not only are these two cases intricately connected, but many others are also awaiting the conclusion of Zhang Ting’s company case, as it concerns not only the social economy but also their personal interests.
