Zhunrize Allegedly Operated Fraudulent Online Marketing Pyramid Scheme

stockbroker fraud attorneysOn September 22, 2014, the Securities and Exchange Commission (SEC) alleged that Zhunrize, Inc. and its CEO, Jeff Pan, have been running a fraudulent pyramid scheme that managed to collect over $100 million from investors globally.

Zhunrize claims to be a legitimate multi-level marketing business wherein members buy online stores and then sell merchandise through them, whilst then earning commissions on products purchased by their customers in conjunction with store sales to other members and assorted fees paid by those members, an SEC complaint alleges.

Zhunrize Reportedly Attracted More than 77,000 Investors

The most fruitful investment returns allegedly were derived from the downline recruitment of other members through store sales, and not directly through tangible product sales, according to the SEC complaint. When a firm‘s revenue is derived from the cash flow of its downline recruitment, red flags should immediately be hoisted that the operation may be a Ponzi or pyramid scheme.

At present, Zhunrize has reportedly brought in approximately $105 million from about 77,000 investors since 2012, according to the SEC complaint.

The SEC further alleges that Zhunrize showed a video to potential investors which claimed that the Zhunrize “model will sustain itself because we will have millions more customers than distributors” and the narrator also asserts that “we have the Vendor Relationships, the Logistics, the Payment Gateways to reach millions of new customers each month.”

Investment Rights Lawyers Investigating

The Peiffer Rosca Wolf investment rights lawyers often represent investors who lose money as a result of Ponzi or pyramid schemes. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.

Investors who believe they lost money as a result of Ponzi or pyramid schemes, or if you have been victimized by Zhunrize, please contact the investment rights  lawyers at Peiffer Rosca Wolf, Alan Rosca or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 888-998-0520.

Alan Rosca (1225 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow cases about which we report, and/or to publish subsequent blogs regarding various developments that may occur in such cases. Readers are encouraged to conduct their own research regarding any such cases and any developments that may or may not have occurred in such cases.