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A company in Northeast China promised to make a mountain out of an anthill and raised 3 billion yuan (US$725 million) from gullible investors by promising big profits in a project to breed ants.

Donghua Ecological Breeding Co in Liaoning Province offered returns of 35 to 60 per cent on investment in the bogus project.

The Ministry of Public Security (MPS) cited the case Thursday as an example of how fraudsters were getting more devious and imaginative, and warned that such cases of mass swindling could lead to social instability.

The country witnessed about 62,000 cases of economic crimes so far this year a rise of more than 9 per cent the MPS said at a press conference.

Police recovered 13 billion yuan (US$$1.65 billion) after ferreting out more than 49,000 cases of fraud, pyramid selling and illegal fund-raising. The amount was about half more than in the same period last year.

Economic crimes "could trigger social instability and impede economic security of the country," said Gao Feng, deputy director of the MPS' economic crime investigation bureau.

In the first 10 months of the year, police investigated 1,210 major cases of mass swindling, he said.

The alleged offences involved 17.5 billion yuan (US$2.2 billion) and accounted for 22.2 per cent of all money involved in economic crimes during the period.

Police also recovered 399 million yuan (US$50.5 million) in 507 cases involving illegal pooling of public funds, and 169 million yuan (US$21.4 million) from 501 cases of fund-raising fraud.

Suspects in the cases, such as stock issues or other fund raising, typically promise abnormally high and quick returns, the official said.

For instance, two people in Shanghai, after registering a company in the United States, raised some 20 million yuan (US$2.5 million) by selling shares to private investors using a prospectus containing false figures and fake statements.

A pyramid-selling company in Guizhou Province enrolled more than 100,000 members online in Shandong and Henan provinces and illegally sold 126 million yuan (US$15.9 million) worth of "medicines."

Other forms of fraud include promises to start high-tech or pharmaceutical companies; growing new cash crops; or real-estate development.

The modus operandi is to take advantage of people's yearning for a quick improvement in living conditions, said Tong Lihua, senior partner of Beijing-based Zhicheng Law Firm.

"Most of the victims are the elderly, who want higher returns for their savings," Gao said, adding that even some white-collar workers were among the victims.

He admitted that it was usually not easy to see through such kinds of deceptions; so the MPS is building a database on inter-province and inter-regional pyramid sales cases.

Even though the government banned pyramid sales in April 1998, police uncovered 1,499 cases during the first nine months of this year involving 5.16 billion yuan (US$640 million) worth of goods.

Police spokesman Wu Heping advised citizens to hold on to their purse strings tightly when someone tries to sell them a "get-rich-quick" scheme.

"There is no free lunch in this world. You might have had one lucky experience, but don't think about trying a second time," warned Wu, adding that people do not need degrees in economics or marketing to avoid being cheated. All they have to do is to shun salespeople who wax lyrical about lucrative deals, he said.