For as long as anyone can remember, Shiji has been poor. The village is little more than a dusty grid of brick shacks and its residents live on an average of just 10,000 yuan (£1,000) a year.

But this spring, a miraculous transformation occurred. The locals suddenly noticed that they were rich.

"We have become a BMW town!" wrote one shocked villager on a local internet forum. "In our county, there are now 800 BMWs and 600 Mercedes, 500 Audis, 50 Porsches, 30 Jaguars, one Ferrari, one Lamborghini and one Maserati," he added.

What happened in Shiji is a fraud that plays out every day in some corner of China's murky economy, as local Communist Party officials and greedy entrepreneurs collude in vast pyramid schemes.

"It all began when a man named Shi Guobao returned to Shiji after working in Beijing," said Zhu Yi, the head official in the village.

"He became a property developer, but he wanted to make a bigger fortune so he decided to also become a loan shark." Together with 17 of his friends, Shi began tapping the villagers for their savings, promising to pay them 10 per cent interest each month.

The gang quickly raised 350million yuan, (£35.5million) which they then lent out at rates of 30 per cent or more each month to borrowers including local property developers. Shi became known as "King Claw", the man at the head of the pyramid.

patpending wrote:http://www.telegraph.co.uk/news/worldnews/asia/china/8783588/BMW-town-crashes-in-pyramid-fraud.html

For as long as anyone can remember, Shiji has been poor. The village is little more than a dusty grid of brick shacks and its residents live on an average of just 10,000 yuan (£1,000) a year.

But this spring, a miraculous transformation occurred. The locals suddenly noticed that they were rich.

"We have become a BMW town!" wrote one shocked villager on a local internet forum. "In our county, there are now 800 BMWs and 600 Mercedes, 500 Audis, 50 Porsches, 30 Jaguars, one Ferrari, one Lamborghini and one Maserati," he added.

What happened in Shiji is a fraud that plays out every day in some corner of China's murky economy, as local Communist Party officials and greedy entrepreneurs collude in vast pyramid schemes.

"It all began when a man named Shi Guobao returned to Shiji after working in Beijing," said Zhu Yi, the head official in the village.

"He became a property developer, but he wanted to make a bigger fortune so he decided to also become a loan shark." Together with 17 of his friends, Shi began tapping the villagers for their savings, promising to pay them 10 per cent interest each month.

The gang quickly raised 350million yuan, (£35.5million) which they then lent out at rates of 30 per cent or more each month to borrowers including local property developers. Shi became known as "King Claw", the man at the head of the pyramid.

Windy wrote:I wonder if they bought all the BMWs on credit?