Vietnam ecommerce firm busted for fraud, tax evasion

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Seven people from an ecommerce company were arrested in the northern province of Phu Tho and Hanoi on suspicion of tax evasion and fraud involving hundreds of billions dong.

A report on VnExpress Thursday said that earlier that day Hanoi police issued an arrest warrant against Ngo Van Huy, board chairman of Muaban24 Online Trade and Training Company, and his subordinates - vice board chairman Le Van Cuong, general director Nguyen Tuan Minh, and Nguyen Manh Ha, an IT technician.

The leaders of the company -- which operated an online market with tens of thousands of members who have invested up to VND700 billion (US$33.42 million) in it -- are facing charges of fraud, according to the news website. An unnamed official was quoted as saying that its network covered tens of provinces and cities.

Earlier, on Wednesday, Phu Tho police arrested Truong Dinh Tuan, director of the Muaban24 branch in Phu Tho, and his two vice-directors Dang Trung Dung and Nguyen Ngoc Loan on accusations they had evaded paying nearly VND3 billion ($143,250) in taxes.

Colonel Nguyen Van Vien from Phu Tho's Police Department said their initial findings were that the branch opened in August of last year and since then it was able to recruit members to fund a VND5.2 million ($248.43) "shop" at the company's online market.

It was estimated that nearly 15,000 shops had been established at the time of the Thursday bust, 5,800 of which had been registered officially, helping the company to rake in nearly VND29 billion ($1.38 million).

However, the Muaban24 branch failed to report its sales correctly to the local tax agency, Vien said, adding that they launched an investigation into the case after receiving accusatory letters from hundreds of the company's members.

Last month local media reported that many farmers in the Central Highland province of Dak Lak filed complaints with agencies and the media, accusing Muaban24 of defrauding them.

The farmers said the company's sales agents convinced them to buy a "shop" at the online market, promising that it could bring them hundreds of billions dong in just a couple of months.

The shop was said to give them a place to buy and sell goods at favorable rates. Moreover, as market members, the farmers were asked to recruit additional members and were promised be paid VND1.5 million ($70.9) for each member they brought in successfully.

Without any demand to sell goods online, knowledge about information technology and computer skills, the farmers had to borrow money from others and sell their rice fields, buffaloes and other possessions in order to purchase the online shops, according to the reports.

Speaking to local media, many of them said they realized the company was a scam soon after joining, but they still continued recruiting more members for it for fear that they would lose even more if they pulled out.

Police investigations are ongoing.

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