The Wine That Never Was: How a $1 Billion Pyramid Scheme Used Fine Wine as Bait

It started with a promise of easy money and fine wine—an irresistible combination for Jia Shuang. Like thousands of others, he was drawn into the allure of quick profits through an online platform that claimed to turn wine trading into a lucrative venture. But the bottles Jia thought would bring him wealth never materialized. Instead, he found himself entangled in a sprawling web of deception that would ultimately unravel into one of China’s largest pyramid schemes, involving over RMB 1 billion (US$140 million).

The case, cracked by the Beijing Public Security Bureau, highlights how a seemingly sophisticated e-commerce platform used the allure of wine to trap unsuspecting victims. For Jia, it all began in early 2022 when a friend introduced him to “Mercury墨丘利,” a platform that promised easy earnings through the buying and reselling of wine. Seeing his friend make money, Jia eagerly signed up, linked his bank account, and joined what he believed was a lucrative opportunity.

The process appeared simple: users would purchase wine through the platform and resell it at a higher price, pocketing the difference. To list the wine for resale, however, users had to pay a small fee—1.5% to 2% of the product’s price—on the day of purchase. After the payment was made, the wine would be listed, and typically, by the next day, someone else on the platform would buy it.

At first, the system seemed to work. Jia made some money and, encouraged by his success, began recommending the platform to friends, earning commissions for every new member he brought in. But as he invested more, the platform eventually collapsed, leaving Jia with losses exceeding RMB 100,000 (US$14,000).

From Jade To Wine

Police investigations revealed that “Mercury墨丘利” was operated by a cultural consulting company in Beijing, registered in December 2021. Initially, the company engaged in a similar scheme involving jade reselling. By March 2022, it had transitioned to wine reselling, capitalizing on the growing popularity of wine among Chinese consumers. Participants could earn profits not only from reselling wine but also from recruiting others to join the platform. Referrers received a 3% commission on the wine purchases made by their recruits, with higher commissions (4% to 7%) for those who successfully recruited more members, creating a vast pyramid structure.

As the investigation unfolded, authorities discovered that “Mercury墨丘利” had over 5,000 participants and had accumulated more than RMB 1 billion in illicit funds. In July, the Beijing Public Security Bureau launched a major operation to dismantle the network, arresting 26 people and putting an end to the fraudulent scheme.

For Jia, the experience was a harsh lesson. When questioned by police, he admitted that he never had any real interest in buying wine—his only goal was to make money. He also confirmed that he never actually received any of the wine he supposedly purchased. According to Chinese law, profiting from recruiting new members into such schemes is a classic example of pyramid selling, a practice strictly prohibited.

With the platform now shut down, details about the specific wines it purported to sell remain unclear. But this case is far from unique.

Wine as a Tool for Fraud

Wine has increasingly become a tool for scams and pyramid schemes. As we have just reported, the Singaporean wine executive Elderic Ko of Premium Liquid Assets has been arrested for defrauding at least US$15 million from clients in Singapore and Hong Kong in Bordeaux En Primeur scheme.

In China, customers are even more volunerable. In 2022, authorities in Loudi, Hunan Province of central China, exposed a similar pyramid scheme that operated under the guise of selling home-produced wine, promising high returns and aggressively recruiting new members. The total amount involved in that case exceeded RMB 40 billion (US$5.6 billion).

Similarly, in 2023, an illegal fundraising scheme in Anhui Province involved wine as well. Scammers concocted a story claiming that a RMB 6,400 (US$880) membership fee in a wine company would yield a RMB 2,000 (US$275) interest payout, attracting elderly victims. The perpetrators then disappeared with the money. The wines used were mid- to low-priced but packaged to appear high-end, adding to their deceptive appeal.

The appeal of wine to fraudsters lies in the fact that most Chinese consumers lack basic knowledge of wine quality, while wine itself carries an inherent impression of high value. Additionally, the market is already flooded with over-packaged OEM (original equipment manufacturer) wines. Unscrupulous organizations exploit these characteristics to deceive others using wine as a prop.

Speaking to Vino Joy News, Shen Yi, a veteran wine merchant in China, pointed out, “The pricing of wine lacks transparency. Often, it’s about selling the packaging rather than the quality. Even in legitimate channels, there have been cases where a wine costing just RMB 10 (US$1.40) is sold for RMB 200 (US$28). Such products are well-suited for pyramid schemes. Scammers take advantage of consumers’ poor understanding of wine, but this is damaging to the industry.”

As the Chinese wine market continues to grow, so too does the need for consumers to be vigilant against scams that use the allure of fine wine to mask fraudulent schemes.