In April 2022, the TST beauty brand founded by Taiwanese artist Zhang Ting was fined and confiscated 20 million yuan due to rumors, and 96 properties under his name were also seized. This case that shocked the country triggered heated discussions, with many comments referring to "historical factors".
Indeed, due to different economic development backgrounds, a major group-type economic crime once occurred in Taiwan Province. Although the case involving Zhang Ting is not exactly the same, friends who have a little knowledge of that case will find that some of the scam methods in it have similar effects.
That case was the "Hongyuan Case" that shocked the whole island. The famous Hongyuan Institution collapsed in 1990, and 160,000 people lost their money. But the person in charge was only sentenced to 7 years in prison, and he could still enjoy a luxurious life after being released from prison early. Let’s explore this largest economic case in Taiwan’s history.
The originator of MLM, the vigorous god-making movement
As we all know, Taiwan Province has been deeply influenced by Japan. The Hongyuan case can be said to be in the same line as the series of MLM cases in Japan. In April 1981, Japanese Ichiro Nagano established Osaka Toyota Company (not a well-known Japanese car company), and later developed into a well-known first-generation pyramid selling organization.
used the ultra-high investment return rate as bait to defraud a large amount of private investment. In just 4 years, it has absorbed nearly 200 billion yen and established hundreds of branches. It was not until June 1985, when Ichiro Nagano was arrested on live television that the truth became known to the world. The company quickly went bankrupt, and tens of thousands of Japanese families went bankrupt.
The death of Ichiro Nagano not only failed to awaken the conscience of society, but instead made some greedy people smell the smell of money. The pyramid scheme quickly became popular in Taiwan and other places. In the 1980s, Taiwan Province was experiencing rapid economic development and was also included in the Four Asian Tigers .
The crazy inflow of hot money , the Taiwan stock market exceeded 10,000 points. The people of Taiwan have become rich and have a lot of spare money. "Taiwan's money is overwhelming." However, due to the long-term financial controls in Taiwan, it is not cost-effective for ordinary people to deposit money in banks. When currency proliferation and financial controls appeared at the same time, some people began to take notice and started a pyramid scheme empire.
During the peak period of Taiwan's financial development, one person who had being promoted to the highest level was Shen Changsheng. Born in 1942, he was not eye-catching when he was young. When he was almost 40 years old, he had just founded Yuanjing Futures and his performance was not outstanding. But in 1982, Shen Changsheng suddenly transformed into Hongyuan International Investment Consulting Co., Ltd., and his private business underwent earth-shaking changes.
On the surface, this company is responsible for investment consulting at home and abroad. In fact, it uses pyramid schemes to attract money like crazy. With the lessons learned from Ichiro Nagano, Shen Changsheng is particularly skillful in setting up his eyesight. He did not choose the single sale gold certificate model used by Nagano Ichiro. Instead, first developed a series of investment projects to confuse the public.
In his plan, the company's business scope included construction, catering, security, department stores and other investment areas, plus the earliest overseas investment and futures investment. From the perspective of private investors, a large number of investment projects are blooming everywhere, and their optimism about the long-term development of Taiwan's economy makes them willing to invest heavily.
In order to quickly attract more investors, Shen Changsheng not only promised that these projects would be very profitable, but the interest rates would also be astonishingly high. At that time, the average annual interest rate of banks in Taiwan was no more than 10%, but the rate here for Shen Changsheng was 48%. The high rate of return of has attracted the attention of people across the island. For several years after this,
relied on a steady stream of investment funds contributed by investors. Hongyuan Group has been making rapid progress and formed a massive " rat society " on the island. In order to extend the MLM period and attract more investments, Hongyuan Group has paid investors 48% of the annual interest on time for 7 consecutive years. Everyone has deep faith in this company.
Just like this, by absorbing investment from retired military, public and educational groups, has illegally collected over NT$100 billion . Hongyuan Group has become the largest "rat club" on the island, and Shen Changsheng has become the newly emerged "God of Finance." Then why do people like the military, public and religious groups love the Rat Club so much? This is closely related to the historical financial background at that time.
Smart scams are all aimed at smart people
After World War II, a financial management method appeared in Taiwan for a short period of time-underground banks. Since the post-war economy needs to recover, it is relatively good for sugar, steel and other trade. In Taiwan, underground banks like Qiyang Trading Company have appeared, using high interest rates to attract investment, but in the end the investment failed and ended miserably.
Since then, the Taiwan authorities have cracked down on underground banks in order not to affect the steady recovery of the economy. Until the late 1970s and early 1980s, with the development of the economy and surplus funds, underground banks revived.
In 1978, Huamei Investment Company frantically solicited investments at a monthly interest rate of two and a half cents. The investment failed in just three years, and hundreds of millions of dollars disappeared. A large part of the victims of this wave of underground banks are military, public and religious people. The reason for is probably because the living conditions of this group of people are somewhat embarrassing.
In Taiwan, the population can be roughly divided into locals and people from other provinces. A large proportion of military and public education personnel are soldiers from other provinces. After they arrived in Taiwan in 1949, except for a few high-level vested interests, most of them not only had no political resources after they retired from the army, but they often just took money to get things done.
At that time, many people hoped to have the opportunity to return to the motherland, so they did not immediately buy property in Taiwan. By the time they found it difficult to come back, it was already too late. House prices in Taiwan had already been skyrocketed. In order for future generations to gain a foothold in Taiwan, this group began to place their hopes on investment and get a lot of income through quick money.
At that time, Taiwan’s financial controls made them very dissatisfied with bank interest rates. Who should invest their money? The underground bank has identified the funds in the hands of this group of people, and has taken advantage of their urgent need to get rich, and has lured them with high interest rates to attract investment.
At that time, there was also a craze for futures speculation in Taiwan. Since there was no futures market on the island, futures companies used the name of overseas markets to attract investment from customers. Due to the lack of control, many leather bag companies also emerged during this period.
Many small futures companies do not directly participate in transactions. Instead, they transfer customers' assets and give a certain percentage of commissions to larger trading companies. slowly developed the complex tower proxy structure in the futures industry.
Shen Changsheng's Jingyuan Futures Company was established during this period. He combined the tower structure of the futures industry with the high-profit savings of underground banks, and then referred to the experience of Japanese MLM organizations to become the leader of a new generation of MLM organizations.
Hong Customers of Yuan Group only know that they have invested in profitable projects and can receive high interest rates on a regular basis. They do not know whether these project companies are actually making money. Taiwan's stock market at the time also boosted Hongyuan Group, and the bubble grew bigger and bigger.
In July 1985, the Taiwan stock price index was only 636.02 points. By February 1990, it soared to 12682.41 points. The strong bull market of has brought almost everyone on the island to participate in stocks, and basically every company of has investors. The turnover rate during this period was also astonishingly high, even setting a miracle of 600% turnover rate in a single day.
It has become easy for Hongyuan Company to maintain high interest rates for investors. They only need to do two things well: 1. Use the money from later investors to fill the interest holes of previous investors; 2. Make a lot of money by throwing large sums of money in the stock market.
uses investors' money to invest in the stock market, and uses the stock market and new investments to pay high interest. Investors will invest more when they make profits, and Hongyuan's investment can push up the bubble in the stock market. This kind of operation goes through a cycle. allows investors to be firmly trapped and will not easily detect the existence of the trap.
With the stock market changing rapidly, is Hongyuan’s investment so flawless? Behind Shen Changsheng there are two mysterious figures, . Together with Shen Changsheng, they protect the entire Hongyuan MLM business. Let us unveil their veil
Three people became a tiger, and the greedy investors lost their dreams.
Now when we talk about the Hongyuan case, besides Shen Changsheng, we will definitely talk about two other people-Yu Yongming and Liu Tieqiu. Yu Yongming is Hongyuan’s professional investment manager, while Liu Tieqiu is an excellent publicity minister. and Shen Changsheng were well-known at that time. These three people from Hongyuan formed the "iron triangle", which made Hongyuan unparalleled in the limelight for a while.
Let’s talk about Yu Yongming first. He is an investment genius himself. Before he entered Hongyuan, he accurately predicted the appreciation of the Japanese yen and New Taiwan dollar, and many people followed his predictions and made real money. When he entered Hongyuan, investors' confidence increased greatly. Hongyuan kept publicizing that Yu Yongming was proficient in foreign exchange, futures, and stock speculation.
and Liu Tieqiu was born to be a pyramid schemer. He was eloquent and his words could inspire people. Every time holds a briefing session, it can incite many ordinary people who don't understand investment at all to willingly invest money in Hongyuan. Worried that the organization would develop too quickly and be subject to supervision, Shen Changsheng also carefully planned the organization's development model.
He divided Hongsheng's investors into two categories: one category is just a simple investor, they only enjoy high interest returns; and the other category is the so-called "deposit-sucking manager", who can get what they need by soliciting customers. Rebate for the next home. This is the important tower structure of Hongyuan.
Ordinary investors can get a monthly interest of 4 cents by investing 150,000 yuan, which is a profit of 6,000 yuan. Such benefits are attractive enough, but Hongyuan feels it is not enough. They want as many as possible to circle the leeks and cut them . The deposit manager must first invest 900,000 at the beginning to become a VIP. Not only can he earn 36,000 yuan in income, but he can also get an additional 8,000 yuan in basic salary.
's job is to find other people who want to become VIPs. As long as they introduce others to become VIPs, they can get an additional 6,000 referral fee. The deposit manager must bring in one person every month, and the base salary of 8,000 before will become 14,000. Many people have dragged almost all their relatives and friends into the water in order to make profits. Hongyuan's road to attracting investment is invincible.
In 1988, Hongyuan's development reached its peak. They bought basketball teams, movie theaters, construction companies, department stores, and even high-end hotels in prime locations. Shen Changsheng also married Shi Si, the most popular actress of Shaw Brothers at that time.
Tens of thousands of investors held a solidarity meeting at Taipei's Chunghwa Stadium to thank their "God of Wealth" Shen Changsheng. The soaring salute of even lit up the roof of the stadium, and Hongyuan was like the sun. People paid homage to Shen in a crazy atmosphere, thanking him for leading them to get rich together.
At the Unity Conference in Changhua in 1989, the emcee even choked up and recited "The Chicken Leg I Can't Want to Eat". The article mentioned that investors could not afford to eat chicken drumsticks before, but now they can eat delicacies from the mountains and seas every day by following Hongyuan. The investors present felt the same and thanked Director Shen with tears in their eyes, but they never imagined that the building would collapse just this year.
The long-term financial control has allowed the Taiwan authorities to see many shortcomings. In order to prevent the bubble from getting bigger and bigger, the government decided to liberalize financial controls and revised relevant laws. Three of the adjustments ruined Hongyuan's "grand ambition". First, interest rates will be adjusted by the market in the future, and the government will not control whether they are high or low. Second, private capital can open banks, and market-oriented competition in the banking industry has begun.
These two changes caused the banking industry, which was originally a government monopoly, to be hijacked by capital in an instant. Everyone who could open a bank opened a bank, and interest rates began to skyrocket. What's even more terrifying is the third one, which is the fatal blow to Hongyuan.
"Except for formal financial institutions, other institutions are not allowed to absorb deposits." As soon as this article came out, the Taiwan Procuratorate and the Investigation Bureau began to seize underground investment companies .Companies similar to Hongyuan will go bankrupt and liquidate if they are small. A large number of people took action upon hearing the news and demanded to redeem their principal in Hongyuan. Hongyuan was run four times in three weeks, and even after paying 20 billion in cash, it did not stop.
On January 10, 1990, Shen Changsheng finally couldn't bear it anymore and had to step forward to host a press conference. "Hongyuan will stop lending..." As soon as these words came out, all stocks related to Hongyuan plummeted, and the myth of wealth creation was shattered. The collapse of
Hongyuan also caused a chain reaction. Taiwan's stock market collapsed immediately, and the stock price plummeted. plummeted from a high of 12682 to 2485, less than a fraction of the high. Hongyuan collapsed, leaving with more than 90 billion in debt and a lot of chicken feathers, and 160,000 investors lost their money overnight.
As the person in charge of Hongyuan Fu, Shen Changsheng was only sentenced to 7 years and a fine of NT$3 million, and was released from prison on parole in less than 4 years. Living in his own mansion, enjoying popular food and drinking spicy food, his bones are frozen to death. The last time he was seen was on January 30, 2022, when he flew to Xiamen from Taiwan to celebrate the New Year with his family after the quarantine period.
On February 15, 2022, water flowed out of Shen Changsheng's room, and the staff found that he was dead in the bathroom. When Hongyuan was most prosperous, Zhang Ting was just 20 years old. I wonder if it was the "Rat Club" that was famous at that time that inspired her. Today, the scene where millions of mothers lose everything for her TST is too similar to that time.
The reason why these speculators can deceive so many people is simply taking advantage of people's greed. In recent years, MLM-related cases have often been reported in mainland China, and their dens have been destroyed. How many people have learned the lesson of blood and tears before, but there are still many people with bad memories who do not hesitate to fly into the flames in order to get rich overnight.
The methods of the Ponzi scheme have been constantly being renovated, and in the future they may even be disguised as high-tech. I just hope that everyone can remember the lesson, watch their own pockets, and not give scammers an opportunity. What do you think about Hongyuan Group’s huge pyramid scheme? You are welcome to discuss it in the comment area.
