A pyramid scheme ring involving nearly 10 million yuan (1.6 million U.S. dollars) and more than 200 members has been busted, police in south China announced on Wednesday.

Police in Guilin City of Guangxi Zhuang Autonomous Region arrested two ringleaders who fled to Shahe City of north China's Hebei Province. Another ringleader surnamed Chen gave himself up later.

Police said the ring was involved in illegal fund-raising, asking new members to invest 33,500 yuan each while promising them 12 million yuan in one or two year's time.

The three ringleaders confessed and said they also recruited members to pay 3,800 yuan for a product and promised them profits if they managed to coax others into the scheme, said the police.

Pyramid selling has been banned in China since 1998 but is rife in many less-developed regions. In recent years, the fraud has evolved from touting fake products to more sophisticated ways of fund-raising and extended to the Internet.

According to reports, a rising proportion of college graduates have fallen victim to such scams, as they have become frustrated by tough competition in the job market.

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