China’s ‘Jewish People’s Wisdom Network,’ and Other Pyramid Schemes

On Feb. 1, Chinese authorities accused the online financing platform Ezubao of a massive Ponzi scheme, alleging that the online finance company cheated nearly one million mostly small investors out of more than $7.4 billion by selling fraudulent investment products. Ezubao is one of the largest examples of a Chinese company enriching itself by selling fake or intensely misleading products — but it is merely a standout in a very crowded field. China’s transition into a market economy — at times lightly regulated and often marked with corrupt governance — has bred an uncountable number of hucksters and tricksters, from those selling fake tea, poisonous pork, or misplaced copper to people like Wang Zhendong, executed in 2008 for swindling $416 million from thousands of investors with a get-rich-quick ant breeding scheme. But perhaps none have been weirder than the Jewish People’s Wisdom Network, an organization that, for at least several months from 2008 to 2009, played off Chinese people’s widely held belief that Jews possess a vast and knowable body of knowledge that helps people get rich quickly.

“Was I cheated by the Jewish People’s Wisdom Network?” is a question that, even today, lurks in some of the lonely corners of the Chinese Internet. In dozens of April 2009 posts on Baidu’s question and answer service and other scattered websites, anonymous netizens asked variations of this question. “Will the Changsha Jewish People’s Wisdom Network give me my money back?” asked one, referring to a midsize city in central China, best known for being the site of a young Mao Zedong’s political awakening. “Isn’t the Suzhou Jewish People’s Wisdom Network a swindling company?” asked one poster on the obscure website QGanjue, referring to a Chinese city famous for its gardens. Netizens complained of the mysterious Jewish People’s Wisdom Network swindling them in at least a dozen of China’s largest cities, from the cosmopolitan Shanghai to the Cleveland-esque Hefei, in a mystery of Talmudic complexity that may never be solved.

Vanishingly little is known about the Jewish People’s Wisdom Network. Technically, it appears to have been some sort of multi-level marketing organization, which compensates salespeople for recruiting others into the organization. Such outfits peddle everything from beauty solutions to Tupperware — in this case, probably to spread “Jewish People’s Wisdom” educational franchises through the country. When done fraudulently, multi-level marketing is similar to a Ponzi scheme, where earlier investors are paid not from actual investments but from money taken from new participants.

In 1998, Beijing instituted a roughly seven-year ban on direct selling, in part to prevent the cheating of its citizens. But China is still littered with fraudulent companies that have scammed anywhere from a handful of victims to hundreds of thousands. They are depressingly common. In 2009, Ye Piaoling, who once ran pyramid schemes himself and then worked as an activist trying to uncover them, estimated that there were five to 10 million pyramid scheme victims walking around China. Some of the fraudulent multi-level marketing schemes achieve massive scale: In early 2014, Beijing accused U.S. skin care giant Nu Skin of operating a suspected illegal pyramid scheme among its roughly 40,000 sellers in China, fined the company, and said it would more closely regulate other companies in that space.

Most of these fly-by-night schemes are small. In one of many examples, a named Chen Zhihua in the city of Nanjing convinced several hundred people that if they paid him, they could make roughly $150,000 in a month through the popular messaging service Wechat. As of May 2015, Chen had reportedly raised $700,000. In his marketing materials, he called himself the Asian Hypnosis Master. So many poor and middle-class Chinese are so eager to find a path to a better life that even red flags like this are not enough to dissuade them.

For the Jewish People’s Wisdom Network, the size of the scam and the amount of money its organizers made is unknown, but almost certainly small; the con never even made it into the newspapers. (Foreign Policy was unable to find an email address or a phone number to contact the Jewish People’s Wisdom Network.) Online traces suggest the Jewish People’s Wisdom Network may have tricked people by doling out such pearls of wisdom in its classes as “a model employee gets to work on time,” and “a regular worker is not very smart.” That style echoes the genre of wildly popular Chinese-language books promising to “unlock” the business-making secrets of Jewish wisdom and lore. Such a book may not deliver on its premise, but at least the bamboozled purchaser hasn’t spent thousands of dollars to get it.

A few of the rare traces of the now-defunct Jewish People’s Wisdom Network remain on China’s most popular video sharing site Youku. One video, set to a techno song by the European band ERA, features a slideshow montage of Chinese students performing team-building activities. Two other videos feature several Chinese men and women who appear to be in their 20s smiling awkwardly at the camera; in one shot a young man proudly brandishes a flimsy stack of money. One hopes they let him keep at least that much.

Image Credit: ChinaFotoPress/Getty