In Zhengzhou City, Henan Province, a fruit company known as “Colorful Fruit Fresh” recently faced an explosion of allegations. The company enticed investors with a high annualized return of 156%, leading some mainland media to believe that Colorful Fruit Fresh was actually a Ponzi scheme.
According to a report on April 23 by “Yicai,” a man named Lao Zhao invested nearly 100,000 yuan in Colorful Fruit Fresh only to find out on April 17 that he couldn’t withdraw funds from his account. Subsequently, both the Colorful Fruit Fresh website and app became inaccessible. When Lao Zhao visited the company’s office, he discovered it deserted and locked up, a stark contrast to its once vibrant atmosphere.
Colorful Fruit Fresh, operated in Zhengzhou, is under the entity Henan Jiucai Supply Chain Management Co., Ltd.
Reports suggest that Colorful Fruit Fresh primarily lured investors through high returns on investment. Firstly, by introducing a partner group purchase model where participants only needed to invest in “fruit carpool” purchases, settling every 3-10 days, they could receive a monthly return of 13% (up to 156% annually), without the need to stock inventory, just by recruiting others to invest.
“Yicai” indicated that this model, disguised under the fruit industry chain, was essentially an investment scam.
Furthermore, Colorful Fruit Fresh launched a crowdfunding business named “Partnering to Open a Store.” Investors contributing 300,000 yuan could establish a fruit retail store called Wanxian kui, with the minimum threshold for investment set at 10,000 yuan. The company guaranteed the store would generate annual revenues of no less than 1.8 million yuan, offering investors an annual dividend of 8% on the investment, ensuring returns not lower than 144,000 yuan annually, equivalent to an annualized 48% return.
Moreover, Colorful Fruit Fresh claimed it was planning to go public, urging more investors to become members and encouraging them to increase their investment, leading investors to believe they would receive substantial returns once the company went public.
To persuade investors, Colorful Fruit Fresh regularly organized full-day closed-door training sessions at fixed locations, offering “origin tracing trips” to fruit production areas to enhance investor confidence.
Industry experts have long questioned the claim of 13% monthly returns on investment by Colorful Fruit Fresh. Local fruit distributors in Zhengzhou told “Yicai” that Colorful Fruit Fresh’s model was merely hypothetical.
In addition, “Sina Fortune” pointed out that the average profit margin in the fruit industry was below 5%, insufficient to support a 156% annualized return. Colorful Fruit Fresh lacked a stable supply chain and did not sell substantial amounts of fruit; the so-called “group purchases” were just a cover.
“Yicai” directly questioned Colorful Fruit Fresh’s business practices, suggesting it might be a Ponzi scheme.
“Sina Fortune” also argued that the clear Ponzi structure of Colorful Fruit Fresh relied mainly on developing downlines (recruiting people) to obtain dividends, rather than real fruit sales profits. After an investigation by the Baokang police in Hubei classified it as a “group telecommunication network fraud,” estimated losses in China had already exceeded billions of yuan.
Li Xu, with over 20 years of experience in anti-pyramid schemes, analyzed that previous fund management schemes relied on generational connections, high rebates, and returns on virtual projects. Now, there’s a shift towards high-yield investment projects under the guise of “rural revitalization” and “direct sourcing from the origin.” However, the essence of many “fruit supply chain” projects is not genuine fruit business but a money game sustained by subsequent investors’ funds. Packaging the so-called “fruit supply chain” as a seemingly risk-free investment project adds to the confusion of the entire scam.
On April 21, local authorities intervened in the handling of the Colorful Fruit Fresh case, summoning some senior executives for questioning.
In April, Colorful Fruit Fresh claimed through its app that registered members exceeded one million, with over 300,000 active members.