When Liu Min’s new boyfriend Zhao Jie began telling her about a company in Hong Kong where she could easily earn tens of thousands of yuan a month, it almost seemed too good to be true. Liu decided to join, paying the HKD5,000 fee required to become a “general distributor.” Little did she know that by doing so, she was enrolling in a pyramid scheme, and that she was only one of several women whom Zhao Jie had hoodwinked into doing so.
In the end, she lost more than RMB400,000 in “investments,” while the company, Sibellac Holdings Ltd., is still alive and well, with Shenzhen remaining a major base of operations for its extensive network of distributors.
How did Liu end up involved in such a big scheme? It all began innocently enough, when Liu met Zhao in 2014 through WeChat’s People Nearby function. She was in her 40s, had been living in Shenzhen for around a decade and, at first, wasn’t interested in Zhao’s overly enthusiastic attitude.
In 2015, though, Liu began going through a rough patch in her life. She reconnected with Zhao, whose presence now seemed reassuring to her. After a couple months, they began dating.
Reflecting on the experience, Liu talks about Zhao as a man in his 50s with a pleasant face and a suave manner: “glib-tongued, when he opens his mouth he’s very persuasive, your heart melts.”
They hadn’t been together for long when Zhao began talking about the Hong Kong company he worked for, and suggested bringing Liu over to take a look.
Zhao was obviously well-off: he drove a BMW and owned a house in Shenzhen’s Bao’an District. Trusting his advice, Liu went with him to visit the Hong Kong company, called Sibellac.
Their business model seemed confusing to her, requiring a HKD5,000 fee to get “operating rights,” and an addition HKD62,587 for each “cut of the market.”
“Many things I was muddleheaded about at first, didn’t ever figure out what was going on.”
It turned out that the fee for a “cut of the market” meant paying up to buy the company’s products, which included milk powder, red wine, watches, incense and other goods.
Liu Min spent HKD22,500 to buy this watch from Sibellac
By selling products and recruiting others, sellers could rise up through seven ranks, starting with “general distributor” and leveling up through “knight,” “earl,” “marquis,” “duke,” “lord,” and eventually, “monarch.” In order to start out as a general distributor, new recruits had to pay the "operating rights" fee of HKD5,000.
While it all seemed strange to Liu Min, the office buildings where Sibellac was located, high-rises in Tsim Sha Tsui’s business area, seemed official enough. Zhao Jie also reassured Liu, saying that the company had multiple offices in Hong Kong and that the field had lots of potential.
Once she signed up, Liu began going to Hong Kong at the beginning of each month for intensive “trainings.” The tone there was highly excitable. The high-level distributors who administered the classes told the recruits that once they reached the level of “earl,” they could earn HKD3 million every month. If five of their referrals reached “earl” level in three months, they would be promoted to “duke,” at which point they’d be qualified to open up their own companies.
Besides paying the initial starting fee, Liu also bought five “cuts,” spending more than HKD300,000 to do so. She never received receipts or fapiao for them. Each time she purchased a cut, Zhao Jie received a HKD14,900 commission.
A document outlining Sibellac's bonus system. Distributors get commissions based on their sales and referrals.
Despite the highly suspicious nature of these goings-on, Liu seems to have never suspected she was involved in a pyramid scheme until recently. She did note, however, that every time Zhao Jie went to Hong Kong on “business,” he brought several female companions with him.
He reassured her that they were just business partners, but despite his efforts, the women he traveled with began contacting each other. They discovered that Zhao Jie was cheating on them all.
By August of this year, one of Zhao Jie’s girlfriends, Xu Jia, had found six other women in the same position as her. She too had been recruited to join the suspicious company in Hong Kong and had undergone trainings alongside Liu Min without realizing they shared the same boyfriend, or that they had both been lured into a giant pyramid scheme.
For Liu Min, the deception might have kept on going if she hadn’t one day read a post on a Shenzhen subway bulletin board. It read: “Please be on guard against Hong Kong’s Digital Crown Holdings, this is a HK pyramid sales company, also called Sibellac…”
The post showed photos of goods Sibellac used, which matched up with those of Liu Min’s experience. The warning ended by asking people to send any information they had about Sibellac’s dealings on the mainland to police.
It was only after reading this that Liu Min discovered the whole truth behind what happened: that not only was Zhao Jie a cheater, but he had also dated her in order to involve her in a cross-border pyramid scheme.
A Shenzhen Evening News investigation revealed that the company Sibellac Holdings was only a “shadow company” for a mainland organization called Digital Crown Holdings Ltd. (DCHL). This pyramid sales company had been caught several times in past years by mainland police. In order to keep operating, in September of 2013 it changed its name and moved its headquarters Hong Kong, where it is registered as “Sibellac Group Co., Ltd.”
Although it's supposedly out of business, the DCHL website is still up
A long-time observer of DCHL said that because of its proximity to Hong Kong, Shenzhen has been the hardest hit by the company's schemes.
Although Hong Kong police are aware of Sibellac’s history and its “business model,” they are unable to take action: the company has hired a legal team to help it take advantage of loopholes in local laws. Thus, despite the revelations of Liu Min, Xu Jia and others like them, the pyramid sales company continues to operate in South China.
[Images via DCHL, Shenzhen Evening News]
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