Leaders of a Vietnamese company in Hanoi, which specializes in multilevel marketing, have been arrested for scamming over 45,000 people and appropriating a total amount of VND1.9 trillion (US$85 million).
Le Xuan Giang, chair of the board of directors, and Nguyen Thi Thuy, deputy general director of Lien Ket Viet, the multilevel marketing company in question, along with five other accomplices, were detained and charged for fraud and appropriation of assets on Friday, according to police officers.
One day after the company’s leaders were nabbed by police, its headquarters, which cover hundreds of square meters in area, were closed, with furniture and employees nowhere to be found, according to the observation of Tuoi Tre (Youth) newspaper reporters.
Since late 2015, several reports have been submitted to the Ministry of Public Security referring to the fact that the leaders of the company and many of its branches had failed to pay commissions to their clients in accordance with their agreements.
Initial police investigation showed that the company started its business operations in 2010 and was granted a business license by competent agencies in 2014.
Its activities focused on the network marketing of various products, including detox machines, different types of dietary supplements, and others.
Giang set a fixed regulation for the distributors of the company, stating that each client would be granted a business code and had to pay a minimum amount of VND8.6 million ($384.85) for the franchise of one of the above products, police officers said.
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 for the company.
Between early 2014 and July 2015, the managerial team expanded its network across Vietnam, opening 21 branches in 19 provinces and gathering over 45,000 participants.
The money collected from the clients was recorded at VND1.9 trillion ($85 million), according to investigators.
After receiving reports from some of the participants, police officers preliminarily asserted that the sum of money in Giang’s bank account was VND45.5 billion ($2.03 million).
The company’s claim that it is under the management of the Ministry of National Defense and has received awards from the prime minister is erroneous, officers said, adding that their dietary supplements may be counterfeit.