Speaking of pyramid selling, I believe many people are familiar with it. Some more or less have been in contact with it, and some have heard of it. The crime of pyramid selling activities disrupt the basic order of the market, resulting in many people being forced to join pyramid selling organizations. Therefore, once people who have been found engaging in pyramid selling, they will be severely punished. If the circumstances are serious, they will be punished by the criminal law. As for whether it is the crime of pyramid selling activities, we need to legally define the crime of pyramid selling activities.

What is the definition of crime of pyramid selling activities?
 

Pyramid selling activities

Pyramid selling activities means that the organizer or operator requires the developed personnel to continue to develop other personnel to join through the development of next level participants, and calculates and pays remuneration to the developed personnel based on the number of direct or indirect rolling development personnel, including material and other interests. Driven by huge interests, many participants even lured their relatives to join, resulting in family destruction and great social harm.
 

Definition of pyramid selling activities

1. The organizer or business operator demands the developed personnel to pay fees through the development personnel, or pay fees in disguised form by purchasing commodities, so as to obtain the qualification to join or develop other personnel to join, and seek illegal interests.

2. The organizer or business operator, through the development personnel, requires the developed personnel to develop other personnel to join, so as to form an up-down business relationship, calculate and pay the online remuneration based on the sales performance of the lower line, and seek illegal interests.
 

Definition of crime of pyramid selling activities

Pyramid selling means organizing or leading on the pretext of marketing commodities or providing services and other business activity, requesting the participants to become eligible by way of paying fees or purchasing the commodities and services and other means, and directly or indirectly taking the number of members recruited as the basis for remuneration calculation or rebate according to a hierarchy formed by certain orders or induces or coerces the participants into continuing to recruit others to participate in any pyramid selling activity that swindles property and disrupts the economic and social orders.
 

Conviction of illegal pyramid selling

Article 224 (A) of Criminal Law of the People's Republic of China (Amended in 2020) “ Where anyone organizes or leads on the pretext of marketing commodities or providing services and other business activity, requesting the participants to become eligible by way of paying fees or purchasing the commodities and services and other means, and directly or indirectly taking the number of members recruited as the basis for remuneration calculation or rebate according to a hierarchy formed by certain orders or induces or coerces the participants into continuing to recruit others to participate in any pyramid selling activity that swindles property and disrupts the economic and social orders, he shall be sentenced to fixed-term imprisonment of no more than five years or criminal detention, and shall be fined; where the circumstance is serious, he shall be sentenced to fixed-term imprisonment of no less than five years, and shall be fined concurrently.
 

How does the law define the crime of illegal pyramid selling? Threatening, luring or intimidating others to develop next level participants, and requiring participants to pay a certain fee or buy a certain commodity to join the organization, this kind of behavior of defrauding money belongs to the crime of illegal pyramid selling. The crime of illegal pyramid selling is punished by law according to the seriousness of the circumstances according to the law. What we should pay attention to is that there are many hidden pyramid selling, If it reaches a certain degree, it also belongs to the crime of illegal pyramid selling

As we all know, the crime of pyramid selling refers to requiring participants to obtain membership by paying fees or purchasing goods in the name of business activities such as selling goods and providing services. And entice or coerce participants to continue to develop others to participate and defraud property. This is a pyramid selling activity that disturbs the economic and social order and has an extremely bad impact on the society. So what is the standard for filing the crime of illegal pyramid selling?
 

What is the standard for filing the crime of illegal pyramid selling?

In the name of marketing goods, providing services and other business activities, the organization and leaders require the participants to obtain the membership qualification by paying fees or purchasing goods and services, and form a hierarchy in a certain order. The number of development personnel is directly or indirectly used as the basis for remuneration or return of profits, luring and coercing the participants to continue to develop other people's participation, defrauding property and disturbing the economic and social order. It is suspected of organizing If there are more than 30 pyramid selling personnel and the level is more than three, the organizers and leaders shall be filed for prosecution. The organizers and leaders of pyramid selling activities mentioned in this article refer to the initiators, decision makers and operators who play the role of organization and leadership in pyramid selling activities, as well as the personnel who assume important responsibilities such as planning, command, arrangement and coordination in pyramid selling activities, or play a key role in the implementation of pyramid selling activities.
 

The filing standard of the crime of illegal pyramid selling is that the object of infringement is a complex object, which not only infringes the property ownership of citizens, but also infringes the market economic order and social management order. The object of this crime is citizens' personal property, usually money. pyramid selling is often accompanied by tax evasion and bid up prices, which infringes on many social relations and legal objects.

In the name of organizing and leading business activities such as selling goods and providing services, requiring participants to obtain membership qualification by paying fees or purchasing goods and services, and forming a hierarchy in a certain order, directly or indirectly taking the number of development personnel as the basis for compensation or rebate, luring and coercing participants to continue to develop other people's participation, defrauding property and disturbing economic and social order, it is suspected of organizing The number of pyramid selling leaders is more than 30 and the level is more than three.
 

Any natural person who reaches the legal age of criminal responsibility and has the ability of criminal responsibility can constitute this crime. According to the Provisions of the Supreme People's Procuratorate and the Ministry of Public Security on Criteria for Docketing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Authorities (II), the term "organizer and leader of pyramid selling activities" means any promoter, decision-maker and controller acting organization and leading roles in pyramid selling activities and persons holding such important posts as planning, guidance, arrangement, coordination, etc. or playing key effect in execution of pyramid selling activities. According to Article 2 of the interpretation of the Supreme People's Court on the specific application of law in the trial of unit crime cases on June 18, 1999: "if a company, enterprise or institution established by an individual for the purpose of illegal and criminal activities commits a crime, or if the company, enterprise or institution, after its establishment, takes the Commission of a crime as its main activity, it shall not be punished as a unit crime." Therefore, for companies specializing in pyramid selling, according to the provisions of judicial interpretation, they will not be punished as unit crimes, but their organizers and main participants will be convicted and punished as natural persons.
 

The subjective aspect is direct intention, which has the purpose of illegal profit. That is, the perpetrator knows that his pyramid selling behavior is prohibited by national laws and regulations, but in order to achieve the purpose of illegal profit, he still carries out this behavior, and holds a hopeful and positive attitude towards the occurrence of harmful results. Constituent elements and sentencing of the crime of organizing and leading pyramid schemes: according to Article 224 of the criminal law, if it constitutes this crime, it shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention and shall also be fined; If the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than five years and shall also be fined.

I believe everyone has heard the word pyramid selling. As for the concept of pyramid selling stipulated in the law, it is not as simple as we think. Many people in the current wechat business think it is pyramid selling. Now let's learn about the legal interpretation of pyramid selling, so that we can distinguish which are pyramid selling in our daily life. So does this pyramid selling constitute a crime? What is the sentencing standard for the crime of illegal pyramid selling?

Concept

The term "pyramid selling" means acts that interfere economic order and affect social stability by which an organizer or operator recruits personnel and seeks illegal benefits by means of calculating and paying remuneration to the recruited personnel on the basis of the number of personnel directly or indirectly recruited by them or their sales performance, or requiring the recruited personnel to pay certain fees as a condition of being qualified for participation.

According to article 7 of《Regulations for the Prohibition of Pyramid selling》The following acts are pyramid selling acts: 

 (1) an organizer or operator seeks illegal benefits by recruiting personnel, requiring the recruited personnel to recruit other personnel to participate, and calculating and paying remuneration (here and hereinafter including material rewards and other economic benefits) to the recruited personnel on the basis of the number of personnel directly or indirectly recruited by them through rolling recruitment;

(2) an organizer or operator seeks illegal benefits by recruiting personnel and requiring the recruited personnel to pay fees, or fees in disguised forms such as order of commodities, as a condition to being qualified for participation or recruiting other personnel to participate; and

(3) an organizer or operator seeks illegal benefits by recruiting personnel and requiring the recruited personnel to recruit other personnel so that an upline-downline relationship is formed, and calculating and paying remunerations to an upline personnel on the basis of the sales performance of his downline personnel.

The application of charges

Whoever, for the purpose of illegal possession, organizes and leads pyramid selling activities, which simultaneously constitutes the crime of organizing and leading pyramid selling activities and the crime of fund-raising fraud, shall be convicted and punished in accordance with the provisions on heavier punishment.

Whoever commits the crime of organizing and leading pyramid selling activities, and commits acts such as intentional injury, illegal detention, extortion, obstruction of official duties, gathering people to disturb social order, gathering people to attack state organs, gathering people to disturb the order of public places and traffic order, which constitute a crime, shall be punished in accordance with the provisions on combined punishment for several crimes.

For any one who is suspected of organizing or leading pyramid selling activities, under the guise of promoting commodities, providing service or other operation activities, to require participants to pay charges or purchase commodities for access, structure levels for participants in a certain order, directly or indirectly take the number of persons persuaded to participate in the pyramid selling activities as the grounds for calculating remunerations or bonus, tempt or threaten participants to persuade others to participate in the pyramid selling activities, defraud money and properties, and disturb social order, the case shall be filed to prosecute the organizer(s) and the leader who is suspected to have organized and led over 30 participants of 3 levels and more, he shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention and shall also be fined; If the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than five years and shall also be fined

If pyramid selling constitutes a crime and the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also be fined; If the circumstances are especially serious, he shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined. Generally speaking, ordinary people who participate in pyramid selling are not dealt with according to the crime of illegal business. This crime only deals with the leading elements and main members. At the same time, in pyramid selling activities, if there are kidnapping, illegal detention, abuse, injury and other acts, they should be punished for several crimes. If it does not constitute the crime of illegal business operation, it shall generally be punished by the industrial and commercial department in accordance with the regulations on the prohibition of pyramid schemes.

Legal basis

Criminal Law of the People's Republic of China (Amended in 2020)

Article 224 (A) [Crime of Organizing or Leading Pyramid Selling Activities] Where anyone organizes or leads on the pretext of marketing commodities or providing services and other business activity, requesting the participants to become eligible by way of paying fees or purchasing the commodities and services and other means, and directly or indirectly taking the number of members recruited as the basis for remuneration calculation or rebate according to a hierarchy formed by certain orders or induces or coerces the participants into continuing to recruit others to participate in any pyramid selling activity that swindles property and disrupts the economic and social orders, he shall be sentenced to fixed-term imprisonment of no more than five years or criminal detention, and shall be fined; where the circumstance is serious, he shall be sentenced to fixed-term imprisonment of no less than five years, and shall be fined concurrently.

Regulations for the Prohibition of Pyramid Selling

Article 24. If anyone has an act specified in Article 7 hereof such as organizing and planning pyramid selling, the administration for industry and commerce shall confiscate his illegal property and illegal gains, and impose a fine of not less than Rmb 500,000 and not more than Rmb 2 million. If the case constitutes a criminal offence, criminal liability shall be pursued in accordance with the law. If anyone has an act specified in Article 7 hereof such as referring, luring or forcing other people to participate in pyramid selling, the administration for industry and commerce shall order him to cease the illegal act, confiscate his illegal property and illegal gains, and impose a fine of not less than Rmb 100,000 and not more than Rmb 500,000. If the case constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.

If anyone has an act specified in Article 7 hereof such as participating in pyramid selling, the administration for industry and commerce shall order him to cease the illegal act, and may impose a fine of not more than Rmb 2,000.

Article 26. If anyone provides business premises, training venue, sources of goods, safekeeping, warehousing or other conditions for the pyramid selling acts specified in Article 7 hereof, the administration for industry and commerce shall order the party to cease the illegal act, confiscate his illegal gains and impose a fine of not less than Rmb 50,000 and not more than Rmb 500,000. If anyone provides internet information services for the pyramid selling acts specified in Article 7 hereof, the administration for industry and commerce shall order the party to cease the illegal act and notify the relevant authority to impose penalty in accordance with the Administration of Internet Information Services Procedures.

Provisions of the Supreme People's Procuratorate and the Ministry of Public Security on Criteria for Docketing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Authorities (II)

Article 78 [Case of organizing or leading pyramid selling activities ( Article 224 (a) of the Criminal Law)] For any one who is suspected of organizing or leading pyramid selling activities, under the guise of promoting commodities, providing service or other operation activities, to require participants to pay charges or purchase commodities for access, structure levels for participants in a certain order, directly or indirectly take the number of persons persuaded to participate in the pyramid selling activities as the grounds for calculating remunerations or bonus, tempt or threaten participants to persuade others to participate in the pyramid selling activities, defraud money and properties, and disturb social order, the case shall be filed to prosecute the organizer(s) and the leader who is suspected to have organized and led over 30 participants of 3 levels and more, the case shall be placed on the docket for legal action.

For the purpose of this Article, the term "organizer and leader of pyramid selling activities" means any promoter, decision-maker and controller acting organization and leading roles in pyramid selling activities and persons holding such important posts as planning, guidance, arrangement, coordination, etc. or playing key effect in execution of pyramid selling activities.

As we all know, the crime of pyramid selling refers to requiring participants to obtain membership by paying fees or purchasing goods in the name of business activities such as selling goods and providing services. And entice or coerce participants to continue to develop others to participate and defraud property. This is a pyramid selling activity that disturbs the economic and social order and has an extremely bad impact on the society. So what is the standard for filing the crime of illegal pyramid selling?
 

What is the standard for filing the crime of illegal pyramid selling?

In the name of marketing goods, providing services and other business activities, the organization and leaders require the participants to obtain the membership qualification by paying fees or purchasing goods and services, and form a hierarchy in a certain order. The number of development personnel is directly or indirectly used as the basis for remuneration or return of profits, luring and coercing the participants to continue to develop other people's participation, defrauding property and disturbing the economic and social order. It is suspected of organizing If there are more than 30 pyramid selling personnel and the level is more than three, the organizers and leaders shall be filed for prosecution. The organizers and leaders of pyramid selling activities mentioned in this article refer to the initiators, decision makers and operators who play the role of organization and leadership in pyramid selling activities, as well as the personnel who assume important responsibilities such as planning, command, arrangement and coordination in pyramid selling activities, or play a key role in the implementation of pyramid selling activities.
 

The filing standard of the crime of illegal pyramid selling is that the object of infringement is a complex object, which not only infringes the property ownership of citizens, but also infringes the market economic order and social management order. The object of this crime is citizens' personal property, usually money. pyramid selling is often accompanied by tax evasion and bid up prices, which infringes on many social relations and legal objects.

In the name of organizing and leading business activities such as selling goods and providing services, requiring participants to obtain membership qualification by paying fees or purchasing goods and services, and forming a hierarchy in a certain order, directly or indirectly taking the number of development personnel as the basis for compensation or rebate, luring and coercing participants to continue to develop other people's participation, defrauding property and disturbing economic and social order, it is suspected of organizing The number of pyramid selling leaders is more than 30 and the level is more than three.
 

Any natural person who reaches the legal age of criminal responsibility and has the ability of criminal responsibility can constitute this crime. According to the Provisions of the Supreme People's Procuratorate and the Ministry of Public Security on Criteria for Docketing and Prosecution of Criminal Cases under the Jurisdiction of Public Security Authorities (II), the term "organizer and leader of pyramid selling activities" means any promoter, decision-maker and controller acting organization and leading roles in pyramid selling activities and persons holding such important posts as planning, guidance, arrangement, coordination, etc. or playing key effect in execution of pyramid selling activities. According to Article 2 of the interpretation of the Supreme People's Court on the specific application of law in the trial of unit crime cases on June 18, 1999: "if a company, enterprise or institution established by an individual for the purpose of illegal and criminal activities commits a crime, or if the company, enterprise or institution, after its establishment, takes the Commission of a crime as its main activity, it shall not be punished as a unit crime." Therefore, for companies specializing in pyramid selling, according to the provisions of judicial interpretation, they will not be punished as unit crimes, but their organizers and main participants will be convicted and punished as natural persons.
 

The subjective aspect is direct intention, which has the purpose of illegal profit. That is, the perpetrator knows that his pyramid selling behavior is prohibited by national laws and regulations, but in order to achieve the purpose of illegal profit, he still carries out this behavior, and holds a hopeful and positive attitude towards the occurrence of harmful results. Constituent elements and sentencing of the crime of organizing and leading pyramid schemes: according to Article 224 of the criminal law, if it constitutes this crime, it shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention and shall also be fined; If the circumstances are serious, he shall be sentenced to fixed-term imprisonment of not less than five years and shall also be fined.

Pyramid selling is a criminal activity, because it disturbs the order of social activities and infringes on citizens' property ownership. Moreover, pyramid selling has a certain brainwashing for some people with insufficient knowledge or identification. Unknowingly, it deceives the people who are pyramid selling into spending money like running water.

What is the judicial interpretation of the crime of illegal pyramid selling?

In order to solve the problems encountered by public security organs, people's procuratorates and people's courts in handling criminal cases of organizing and leading pyramid selling activities in recent years and punish the crimes of organizing and leading pyramid selling activities according to law, in accordance with the provisions of the criminal law and the criminal procedure law and in combination with judicial practice, the following opinions are put forward on the application of law in handling criminal cases of organizing and leading pyramid selling activities:

For any one who is suspected of organizing or leading pyramid selling activities, under the guise of promoting commodities, providing service or other operation activities, to require participants to pay charges or purchase commodities for access, structure levels for participants in a certain order, directly or indirectly take the number of persons persuaded to participate in the pyramid selling activities as the grounds for calculating remunerations or bonus, tempt or threaten participants to persuade others to participate in the pyramid selling activities, defraud money and properties, and disturb social order, the case shall be filed to prosecute the organizer(s) and the leader who is suspected to have organized and led over 30 participants of 3 levels and more, the case shall be placed on the docket for legal action. Organize and lead multiple pyramid selling organizations. If the level of a single or multiple organizations has reached more than three levels, the number of people developed in each organization can be combined. If an organizer or leader continues to receive remuneration or rebates from the original pyramid selling organization after formally leaving the original pyramid selling organization, the level and number of development personnel of the original pyramid selling organization after its separation shall be calculated as the level and number of development personnel of the original pyramid selling organization. In handling criminal cases of organizing and leading pyramid selling activities, if it is really impossible to collect the verbal evidence of the personnel participating in pyramid selling activities one by one due to the restriction of objective conditions, the number of people participating in pyramid selling can be comprehensively determined in combination with the evidence such as the payment, payment, remuneration and rebate records, audio-visual materials, pyramid selling personnel relationship diagram, bank account transaction records, Internet electronic data, appraisal opinions and so on Number of levels and other criminal facts.

On the identification and handling of relevant personnel in pyramid selling activities

The following persons can be recognized as the organizers and leaders of pyramid selling activities:

（1） Personnel who play the role of initiation, planning and manipulation in pyramid selling activities;

（2） Personnel responsible for management and coordination in pyramid selling activities;

（3） Personnel responsible for publicity and training in pyramid selling activities;

（4） Having received criminal punishment for organizing and leading pyramid selling activities, or having received administrative punishment for organizing and leading pyramid selling activities within one year, and directly or indirectly developing more than 15 people and more than three levels of personnel involved in pyramid selling activities;

（5） Other personnel who play a key role in the implementation of pyramid selling activities and the establishment and expansion of pyramid selling organizations. If a unit commits a crime of organizing and leading pyramid selling activities in the name of the unit, the personnel assigned by the unit who are only engaged in labor work shall generally not be investigated for criminal responsibility.

On the identification of "defrauding property"

If the organizers and leaders of pyramid selling activities fabricate or distort state policies, fabricate or exaggerate business, investment, service projects and profit prospects, cover up the true source of remuneration and rebate or other fraudulent means, and implement the acts specified in article 224-1 of the criminal law to illegally profit from the fees paid by the personnel participating in pyramid selling activities or the fees for purchasing goods and services, they shall be deemed to have defrauded money and property. Whether the personnel involved in pyramid selling activities think they have been cheated does not affect the identification of defrauding property.

On the identification of "serious circumstances"

The organizers and leaders of pyramid selling organizations that meet the provisions of the first paragraph of Article 1 of these opinions shall be deemed to be "serious" as stipulated in article 224-1 of the criminal law under any of the following circumstances:

（1） Organizing and leading more than 120 people to participate in pyramid selling activities;

（2） The accumulated amount of pyramid selling funds paid directly or indirectly by those involved in pyramid selling activities reaches more than 2.5 million yuan;

（3） Having received criminal punishment for organizing and leading pyramid selling activities, or having received administrative punishment for organizing and leading pyramid selling activities within one year, and directly or indirectly developing more than 60 people to participate in pyramid selling activities;

（4） Causing serious consequences such as mental disorder and suicide of personnel involved in pyramid selling activities;

（5） Causing other serious consequences or adverse social impact.

On the handling of "team pay" behavior

The organizers or leaders of pyramid selling activities, through the development personnel, require the developed personnel of pyramid selling activities to develop other personnel to join, form an up-down relationship, and calculate and pay online compensation based on the sales performance of the lower line, so as to seek illegal interests, which is a "team compensation" pyramid selling activity. Simple "team pay" pyramid selling activities for the purpose of selling goods and based on sales performance shall not be treated as a crime. In the form of "team compensation", but in essence, pyramid marketing activities that "take the number of development personnel as the basis for compensation or rebate" shall be convicted and punished for the crime of organizing and leading pyramid marketing activities in accordance with article 224-1 of the criminal law.

With regard to the application of charges, those who organize and lead pyramid selling activities for the purpose of illegal possession and constitute the crime of organizing and leading pyramid selling activities and the crime of fund-raising fraud shall be convicted and punished in accordance with the provisions on heavier punishment. Whoever commits the crime of organizing and leading pyramid selling activities, and commits acts such as intentional injury, illegal detention, extortion, obstruction of official duties, gathering people to disturb social order, gathering people to attack state organs, gathering people to disturb the order of public places and traffic order, which constitute a crime, shall be punished in accordance with the provisions on combined punishment for several crimes. 7、 Other issues "above" and "within" mentioned in this opinion include this number. The "level" and "level" mentioned in this opinion refer to the level of the relationship between the organizers, leaders and those involved in pyramid selling activities, rather than the identity level of the organizers and leaders in pyramid selling organizations. The calculation of the number of people and levels within the pyramid selling organization, as well as the number of people and levels of organizers and leaders who directly or indirectly develop and participate in pyramid selling activities, including the organizers, leaders and their own levels.

The judicial interpretation of the crime of illegal pyramid selling is to identify and punish the behavior of pyramid selling in law, which mainly involves how to be regarded as pyramid selling and the relevant punishment of pyramid selling personnel in law. All those who participate in pyramid selling activities with more than 30 people shall bear criminal responsibility and be subject to criminal punishment. Among them, if there are serious circumstances that cause serious bad social behavior, they shall be severely punished and set an example.