Chinese Official’s Bribery Case Reveals Dangerous Pyramid Scheme Operated by Billionaire

By Olivia Li, Epoch Times
April 30, 2019 Updated: April 30, 2019

A recent Chinese court verdict sentencing an internet censorship official to prison for corruption crimes has revealed a darker web of misdeeds by a billionaire entrepreneur who once bribed him.

In March, the Beijing Municipal Court sentenced Chen Hua, former deputy director at the Beijing office of the Cyberspace Administration, to nine years imprisonment and a 600,000 yuan (about $90,000) fine for graft. He was found guilty of embezzling more than 3.2 million yuan (about $475,000), and accepting bribes of more than 1.05 million yuan.

One of his beneficiaries was Li Jinyuan, founder and chairman of Tiens Group, which is headquartered in nearby Tianjin City. The court found that between 2006 and 2013, Li paid Chen roughly 880,000 yuan in bribes.

Following the court verdict, media attention turned to Li and his company—revealed to be running a pyramid scheme that resorted to violent tactics to recruit staff.

Li founded the company in 1995 as a business selling health supplements and skincare, cosmetics, and household products. By 2018, Tiens was ranked 214th on a listing of China’s top 500 privately owned enterprises compiled by the All-China Federation of Industry and Commerce, a national chamber of commerce.

Li had big ambitions for the company. According to a Dec. 29, 2018, report by Chinese state-run media The Paper, Li repeatedly said the company’s goal was to make the Fortune Global 500 List. By the end of 2018, Tiens Group claimed to have branches in 110 countries.

Pyramid Scheme and Recruitment Efforts

On Jan. 7, the state-run Beijing Daily ran an expose revealing that Tiens Group’s business model was actually a pyramid scheme, operating under the name of direct selling. Through misleading advertising, Tiens duped millions of customers into believing the purported benefits of the health supplements it was selling, which were, in fact, phony, according to the report.

The company had been operating like a criminal enterprise, responsible for multiple deaths through its aggressive recruiting practices, the report claimed.

A search on the online portal for China’s Supreme Court reveals that a company named “Tianjin Tiens” was the subject of 2,781 criminal cases brought by local authorities, alleging that the firm committed crimes in its business operations. Tiens has been convicted of running multi-level marketing activities, considered illegal in China. Other criminal allegations involve illegal detention, intentional injury, robbery, involuntary manslaughter, and murder that resulted in a total of 155 deaths, according to the court cases.

They all fall into the same pattern. Company staff tried to recruit new members by inviting the victim to a secret place, under the pretense of dating or other social activities. Then the victim would be forced to join the company, the court cases revealed. If the “new member” refused to join, the company staff would resort to inhumane torture methods or intimidation to coerce them.

Prior to the most recent bribery case, several media reported horrific details of the torture. For example, a March 2014 report by the state-run Guangzhou Daily revealed that perpetrators poured hot water onto victims.

Strangely, Tiens Group remained unaffected. Over the years, the company issued several public notices on its website, claiming that the “Tianjin Tiens” firm mentioned in media reports had nothing to do with Tiens Group.

Chinese authorities and media didn’t announce any further investigations into Tiens’ claims of innocence.

Moreover, China’s state-run media Xinhua sang high praises for Li Jinyuan in a March 2018 article.

The article described Li as a patriotic entrepreneur who became extremely successful through perseverance, moral integrity, and having big dreams.

“Serving the country through industrial development is Li Jinyuan’s true wish,” the Xinhua article wrote. “This year, his goal is to create a world-renowned Chinese national brand.”

“Tianjin Tiens” is, in fact, Tiens Group.

In January, Chinese state media began to change its tone, accusing Li and his company of swindling and killing people.

As often happens in China’s political environment, a shift in media attitudes means falling out of favor with the Chinese authorities.

Flaunting His Wealth

Following the bribery case, Li was labeled a national enemy and Chinese media began digging into his lavish lifestyle.

According to an April 17 report by Chinese news portal Sohu, Li owns a “mysterious mansion complex” in Tianjin, 100 acres in size, surrounded by a 10-foot high fence.

The complex was modeled after the royal palace during the Tang Dynasty. Li paid 1 billion yuan ($149 million) for the furnishings alone, and bought 15 swans. Media have since reported that the palace was demolished by authorities.

According to Tiens Group’s official website, it has held annual company-wide celebrations in six countries: Russia, Thailand, Germany, Indonesia, Kenya, and France.

At a 2002 party in Germany, Li rewarded the firm’s top performing salespersons with 100 BMW limousines, 43 private yachts, 32 private jets, and six luxury villas, according to the Sohu report.

In May 2015, to celebrate Tiens’s 20th anniversary, the company paid for 6,400 of its employees to go on a four-day holiday tour to France and Monaco. Li booked 140 hotels in Paris, and more than 4,700 rooms in Cannes and Monaco for their trip.

Who is Tiens Group’s Secret Supporter?

Known as the richest person in Tianjin, Li started to accumulate wealth when Zhang Lichang was the city’s Party boss. Later, when Dai Xianglong was the city’s deputy Party boss and Zhang Gaoli became Party boss, Li got even more political support.

The company’s website showcased pictures of Li with top officials, including former Politburo Standing Committee member Luo Gan, former propaganda boss Li Changchun, and former head of China’s rubber-stamp legislature Wu Bangguo. There is also a picture of Li shaking hands with the former Chinese Communist Party leader Jiang Zemin. All aforementioned officials are known members of the Jiang faction, who are loyal to Jiang and oppose the current leadership under Xi Jinping.

Since Xi took power in 2012, he has launched a sweeping anti-corruption campaign to rid the Party of misbehaving officials—who were often also members of the Jiang faction.

Those senior officials Li once took photos with have all retired from politics.

With another backer, Chen Hua, being sacked, Li could be next. As of press time, Li’s company is still operating. The whereabouts of Li are unknown.

No punishment has been announced for Li or his company.