Comic hook. By Yu Jie, correspondent Yang Shijun >>Case Incident Difficulty in refunding franchise fee prompts investor to report to police. Fengtai police disclosed that on February 16 this year, Mr. Wu from Jiangxi signed a franchise contract with Zhongke Jinhua to sell crystal tableware for the company, paying a franchise fee of 25,800 yuan. The contract stipulated that the company would supply Mr. Wu with 8,000 sets of crystal tableware for free. If he could sell them all within two months, the entire franchise fee would be refunded, and he could continue as the company's distributor. After returning to his hometown in Jiangxi, Mr. Wu received the goods sent by Zhongke Jinhua. Upon opening the packaging, he discovered that most of the tableware was damaged. Mr. Wu subsequently wired 4,700 yuan to Zhongke Jinhua requesting replacement of intact tableware, but what he received were still defective products. Mr. Wu came to Beijing to request a refund from Zhongke Jinhua, but the company refused on the grounds of "already signed contract." Mr. Wu then reported the incident to the You'anmen police station. Mr. Wu didn't expect that he wasn't the first person to report the case to the police station. Since February this year, the You'anmen police station had frequently received reports claiming that Zhongke Jinhua Technology Co., Ltd. located at No. 39 Xiejie Street, You'anmen Outer, was committing fraud. Small investment, simple technology, abundant returns... For many investors with limited resources, such projects are highly tempting. Zhongke Jinhua Technology Co., Ltd. based in Fengtai is precisely using these banners to attract more than a hundred investors nationwide. Fengtai police disclosed yesterday that whether it's assembling lighters, processing fabric paintings, or selling crystal tableware on consignment, every project promoted by the company hides hidden dangers. Investors often end up losing all their money and have no way to complain. Currently, 18 employees of the company have been controlled by the police on suspicion of contract fraud. Police officers handling the case stated that similar "fraudulent companies" keep emerging, but it's extremely difficult to hold them accountable. Investors must raise their vigilance. >>Investigation Economic Investigation Division gets involved and verifies fraud The police station investigation found that Zhongke Jinhua had formal registration with the industry and commerce bureau and had signed formal contracts with the complainants. Regarding the issues they reflected, such as "the company always finds excuses saying the products processed by themselves are unqualified and refuses to return the deposit," or "providing us with inferior goods that can't be sold," the police station couldn't determine that Zhongke Jinhua was engaged in fraudulent activities. They could only help resolve disputes through contractual dispute mediation. As similar disputes increased, the police station officers suspected there was a problem with the company and reported it to the Economic Investigation Brigade of the Fengtai Public Security Bureau, which was specifically responsible for contract fraud cases. After nearly a month of investigation, the Economic Investigation Brigade found that Zhongke Jinhua indeed had suspicions of fraud. The company used methods like "franchise processing of lighters and fabric paintings" to defraud multiple victims of nearly 100,000 yuan in deposits. After obtaining substantial evidence, the Fengtai police sealed the company on April 27, and Zhao Hongwei and 17 other criminal suspects were controlled on the spot. After review, the suspects admitted to the fraud and disclosed the entire scam technique. Shills lead clients and take half the money According to the police officers, over 90% of Zhongke Jinhua's customers were brought in by shills hired by the company. These shills were scattered around train stations, long-distance bus stations, labor markets, and large shopping malls, specifically targeting people coming to Beijing. They would strike up conversations and introduce entrepreneurial projects. Some people who were eager to find work or start a business, upon hearing that they could make big profits with minimal investment, would follow the shills to Zhongke Jinhua for an "inspection." After seeing product displays and operational demonstrations, they would often try out of curiosity, thinking that the investment was just a few thousand yuan. The investigating officer said that the concept of "spending a little money to achieve great things" was actually planted in the investors' minds when they met the shills. Seeing that the company had legitimate procedures, and the products had various "qualification certificates" and "test reports," they generally wouldn't suspect being scammed. Suspect Zhao Hongwei confessed that there were many professional shills in society, and also many companies like theirs. Whichever company gave the shills more money, they would bring people to that company. Zhongke Jinhua gave the shills a 50% rebate, and paid immediately after the "customer" left, without any delays, so Zhongke Jinhua's "business" was very good. The company has a dedicated after-sales person to handle disputes It was understood that Zhongke Jinhua also specially arranged for an "after-sales person" to deal with investors who came to demand explanations. When investors came to claim their deposit, franchise fee, or goods deposit, the "after-sales person" would step in. The suspects said that their "after-sales person" would use both soft and hard tactics to send the investors away, such as patiently explaining the company's requirements for finished products, telling customers that delivery dates could be extended, or threatening customers that due to customer reasons, they couldn't produce qualified products on time, and would sue according to the contract. Police investigations found that 100% of the victims processed the goods at home. Hearing that litigation was required, it wasn't worth traveling between Beijing and their hometowns just for a few thousand yuan, so they simply abandoned their deposit. Some customers even threatened to report to the police in front of the after-sales personnel, but the latter was unconcerned, saying "there's a contract anyway." Currently, the police have preliminarily verified that Zhongke Jinhua is suspected of defrauding over 100,000 yuan in franchise fees, affecting multiple victims. On Zhongke Jinhua's account, the police found over 2 million yuan transferred from all over the country, involving more than a hundred transferors. The case is currently under further investigation. ■Police Reminder Determine the franchise before checking the company's credit The investigating officer stated that similar material processing franchise scams like Zhongke Jinhua are constantly emerging, but in the past six months, the Fengtai police have only cracked one such case. The reason is that such scams are often carried out by formally registered companies, with contracts, projects, and products. After discovering they've been scammed and reporting it to the police, the police can only mediate as a contractual dispute. Pursuing litigation consumes energy and finances, so investors generally don't choose litigation; secondly, the amount involved in each scam is relatively small, mostly in the thousands of yuan. Many investors adopt an attitude of "paying tuition" and do not pursue further action. The investigating officer expressed that normal franchise scams are usually set up by local people in Beijing, with only an office location in Beijing, and no processing factories, workshops, or raw material bases. The police remind investors to beware of "small investment, high return" franchise projects and material processing. Do not easily believe various wealth-building information provided online, on TV ads, or by strangers. When encountering material processing projects or joining an industry, raise your vigilance, carefully verify the company's qualifications, and during on-site inspections, definitely check the company's factory and workshop. It's best to search for the company's credit and bad records on the internet at that moment. When signing the contract, clearly define the product acceptance standards with the other party and detail the differences between finished and unfinished products. ■Scam Technique Disclosure Scam Technique 1 Liquefied gas swapped for butane lighter poses hazard Processing lighters was Zhongke Jinhua's "ace project" and also the key recommended entrepreneurial project on their website. Zhongke Jinhua's advertisement read: Jin Hua lighters are consumer goods, with a large market demand, never saturated, low investment cost, quick results, easy to learn, no need for large capital, just a 10 square meter room, investing a thousand yuan can start production. Suspect Zhao Hongwei et al. told the police that their promotion attracted many investors. When investors came to inspect Zhongke Jinhua, they arranged for someone to demonstrate on the spot their independently developed "electricity-free, air pump-free, powerful, safe operation" Jin Hua brand lighter charging machine. The entire operation process was very simple: just insert the charging machine into the bottom of the lighter, and the charging would be completed in a few seconds. "Processing lighters" was a material processing project. Investors needed to pay a deposit as collateral for the goods, and using the lighter charging machine also required a deposit. After signing the subcontracting contract and paying the deposit, both parties agreed that three days later, the charging machine and product materials would be sent to the address provided by the investor. The contract would also specify a certain amount of production tasks and clearly state "if the task is not completed on time, the deposit will not be returned." During the police's follow-up visits with some investors, they learned that after receiving the charging machine and lighter materials, following the method demonstrated by Zhongke Jinhua, they found that they couldn't charge the lighter at all. "After much effort, we managed to charge it, but if we leave it alone for a while, it explodes." A local investor told the police. The investigating officer found that lighters generally use butane as fuel. During the demonstration by Zhongke Jinhua staff, they indeed used butane, but the charging machines sent to investors contained regular liquefied gas. Charging lighters became an "impossible task" and posed safety hazards. Scam Technique 2 Subcontracting fabric paintings always fail to meet standards Mr. Zhang was a local investor. In the spring of this year, he encountered a "warm-hearted person" introducing investment projects at the train station and followed him to inspect Zhongke Jinhua. Mr. Zhang recalled that he was interested in the fabric painting subcontracting franchise project. Zhongke Jinhua demonstrated the processing procedure on-site, stating that it only required cutting and assembling the fabric according to the mold paperboard to complete. Staff informed Mr. Zhang that each painting would be repurchased at 40-50 yuan, "the larger the processing volume, the higher the repurchase price." Mr. Sun paid several thousand yuan as a deposit on the spot and signed the contract. A few days later, Mr. Zhang received the raw materials sent by Zhongke Jinhua. After a few days, he brought the completed fabric paintings to Beijing for delivery. A man with a northeastern accent inspected the goods and told Mr. Zhang "the products do not meet the standard and need rework," refusing to repurchase. Mr. Zhang requested the return of the deposit, but was firmly rejected. Suspects Zhao Hongwei et al. told the police that "not meeting the standard" was just an excuse to refuse payment, "we ourselves couldn't possibly make it exactly the same following the mold." Scam Technique 3 Consigning crystal tableware received a pile of defective goods Consigning crystal tableware was another business of Zhongke Jinhua. Zhongke Jinhua claimed to be a "physical fast food utensils company integrating production research and development, processing, and sales of tableware products, with a perfect quality inspection system." Franchisees only needed to pay a small franchise fee to take away a certain number of products for free to sell. If they could complete the sale within a month, not only would the franchise fee be returned, but they could also be upgraded to special dealers and purchase goods from the company at lower prices than other distributors. Mr. Wu from Jiangxi was a consignor of Zhongke Jinhua's crystal tableware, and many others had similar experiences. Zhao Hongwei et al. told the police that after investors paid the franchise fee, the goods they received were all incomplete and the quantity was also incorrect. If complained about, they would often tell the investors: "We'll investigate it," and then stop responding.