Three members of a gang behind an online pyramid scheme in Liaoning province that swindled people out of 248 million yuan ($36 million) were arrested in March, Shenyang police said on Monday.

Li Wei, the group's leader from the Guangxi Zhuang autonomous region, and his associates Qiu Ming and Lin Sen are now in custody and police have recovered 20 million yuan, the Shenyang Evening News reported yesterday.

Over the past year, the gang succeeded in duping almost 10,000 people from 30 cities across China into investing in a pyramid scheme based on the concept of promoting AIDS awareness, the report said.

Li admitted to setting up the front for the scam - an online firm named ECP - in June of last year, it said.

The spurious company, which was registered in the United States, claimed to have received $10 million in funding from the United Nations to develop its AIDS-prevention medicine.

Gullible investors were asked to pay a subscription fee to join the "Global Fund to Fight AIDS" for which they would receive supplies of the drug, the newspaper said without specifying the amount.

After signing up for the scheme, people were told they could make a return on their initial outlay by convincing others to follow suit.

Li was arrested in a hotel room in Shenyang in March after being found with a fake identity card. Further investigation found he had large sums of money and police suspected he could be behind the pyramid scheme.

Pyramid schemes are illegal in China and several other countries.

Earlier this year, Gao Feng, deputy director of the economic crimes department of the Ministry of Public Security, said public security officers would continue to fight this "economic evil".

"Pyramid selling has been rampant in recent years, so we will target groups operating under the guise of direct and online selling," he said.

Last year, a one-month campaign against pyramid scams led to the arrest of 3,300 people, figures from the ministry show.

(China Daily July 30, 2008)