Ant Fraud Yields Death Sentence

The company's name in Chinese -- at 20 characters -- was unusually long in a language known for brevity, and it purported to show that the company was involved in plastics, machine tools, electrical machinery, fisheries, wine, soft drinks, silk and even chicken breeding. On the surface, at least, the company thrived, with 10 subsidiaries and 800 employees.

Wang's picture was often snapped as he stood next to government officials. His company was known for its philanthropy and was the subject of a propaganda piece in the local newspapers.

Su Changhong, deputy leader of the economic investigations unit for the Liaoning police, said Wang, who was married with three children, was known for giving gifts of large sums of cash to friends and relatives. "It was a way to show off his identity as a really rich guy," Su said.

But law enforcement officials say there was a dark side to the happy family man. He kept two mistresses, they said, and more importantly, his company was a facade, built on a pyramid scheme.

The company's advertisements called out to investors with an enticing offer: Invest the equivalent of about $1,300. Get two boxes of "rare" ants. Raise them for the company, and 10 times a year get $52 for your work. In one year, a participant would make about $520, a whopping 40 percent return.

People did get paid, at first, but it turned out that those high returns were being financed not by profits from real economic activity but by money flowing in from subsequent investors. The term doesn't exist in China, but in the United States, that would be called a Ponzi scheme, after Charles Ponzi, a Boston scammer who briefly became a millionaire in 1920 by using such a fraud.

For Wang Ling, 46, who operates a fruit stand with her husband, it seemed like a sound investment. She and her husband had $13,000 they were saving for their daughter's college education, but in the bank, it was earning about 4 percent a year.

"It seemed so easy," she said. "The work was little; the interest was high."

So she put down the money and cleared out a corner of her living room for the ants. Stacked on top of each other from floor to ceiling, the ant boxes became her life for more than a year. Through the window, she watched the long ants run around the grass in the box. Twice a day, she sprayed sugar water inside, and every three days, she placed pieces of cake there.

She wasn't particularly fond of ants, and it wasn't fun work, but, she said, "I was willing because I thought I was making money."

Along with other big investors, she got a tour of the company and felt confident that the ants were being turned into wine and medicines that would be sold at a profit. The Chinese have eaten certain ants, brewed wine from their bodies and turned them into medicines for thousands of years.

Each month, someone from the company came in a car to pick up the ants and pay her.