114 members of crime gang held over $270,000 medical scams

Members of the crime gang are led away after a raid on a hostel on Zhejiang Road. — Yang Shenlai

More than 100 members of a crime syndicate that operated a highly organized medical scam to cheat sick people out of 1.7 million yuan (US$273,000) have been detained, local police in Shanghai said yesterday.

The arrests were made on April 2 following months of surveillance by police across the city. The investigation culminated in raids on the homes of gang members and four clinics in the Pudong New Area, and Putuo and Hongkou districts.

The group made its money by employing corrupt doctors to prescribe unnecessary and massively overpriced medicines to unwitting patients from clinics usurped from their previous owners.

Potential victims were targeted at hospitals and Metro stations and lured to the spurious clinics by "convincers" who told tales of the wonderful service and miracle cures they provided.

Once at the clinics, patients would be given a brief consultation with a doctor and then prescribed large amounts of expensive drugs.

A large proportion of the victims were non-natives who had come to Shanghai in the hope of finding a cure or treatment for a chronic disease.

In one case last month, a man surnamed Li from Hubei Province was lured to a clinic while on his way to the Eye, Ear, Nose & Throat Hospital of Fudan University to have his glaucoma treated. After being seen by one of the gang's doctors he was charged 3,850 yuan for 30 packs of medicine that police later calculated to be worth less than 140 yuan.

Police were alerted to the group's activities last September and a joint investigation led by officers from Pudong was launched in January.

While it is not known exactly how long the group has been in operation, police said more than 500 people had fallen victim to its scams.

The raids were staged after police studied more than 70 hours of surveillance video and identified the groups ringleaders as a couple surnamed Yi and Chen. The pair, along with 12 other key figures, were considered the "executives" of the operation. Lower in the pecking order were 90 "salesmen" and 47 "clerks," police said.

About 80 percent of the gang's members hailed from Hunan Province, they said.

The medical fraud is the largest of its kind in Shanghai. As well as making 114 arrests, police seized almost 2,500 boxes of medicines and a replica gun.

Officers also spoke with the original owners of the clinics. One of them, surnamed Xia, said he was forced into selling his business to Yi last May after receiving several intimidating visits from the gang boss and dozens of his associates.

Another of the clinics was purchased by Li in September 2012, police said.

Many of the doctors recruited by the gang were specialists in traditional Chinese medicine who had retired or were nearing retirement.

They were paid up to 600 yuan per day to prescribe large amounts of expensive, but ineffective medicines, police said.