Trail of risky investments in China

The source of his anxiety? A tower of cardboard boxes in the next room.

Filled with ants.

After more than four decades of backbreaking work tilling the soil, Li Fanghai, 62, and his wife had managed to save $11,000, which they invested in ant farming.

These ants were far more than uninvited picnic guests, the couple were told. When ground into a powder, they become an aphrodisiac, a kidney purifier and general cure-all, the Yilishen Tianxi Group declared. The ants would earn them a 30% annual return.

In reality, critics say, the ants apparently were little more than the bait for a vast pyramid scheme. Over an eight-year period, the company recruited as many as 1 million would-be ant farmers, collecting about $1.2 billion. In mid-December, it filed for bankruptcy.

The story of Yilishen illustrates the get-rich-now mentality here, the constant search for a new angle by those struggling to make a go of it with the communist economy having all but given way to private enterprise, and the frequent collusion of government officials in shady dealings.

Old rules of caution don't carry much weight in a society that has seen some become absurdly wealthy, seemingly overnight. And government officials often are first in line to fleece the laobaixing, or common folk.

Instead of siding with Yilishen's victims -- mostly poor farmers, construction workers and the unemployed -- the government has blocked Internet postings and ordered reporters off the story, ant farmers say. Attorneys in the nation's capital have been discouraged from representing any of them, according to the website of the Beijing Municipal Lawyers Assn.

Most of the victims say they invested with Yilishen because of its close ties with the government and endorsements by prominent officials. Company officials frequently appeared with senior government officials. The company advertised extensively on state television and received a hard-to-get marketing permit.

But it apparently was only one in a spate of risky investment schemes.

In most cases, authorities only moved in to clean up the wreckage. On Dec. 21, the official New China News Agency reported that authorities cracked down on 3,747 pyramid schemes in the first 11 months of 2007. Chinese officials often issue such impressive-sounding statistics when under political pressure.