Zhunrize Allegedly Operated Fraudulent Online Marketing Pyramid Scheme
On 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.