Four conmen are facing up to five years in prison after being prosecuted for running a pyramid scheme.

Chi, the ringleader, was accused of swindling more than 100 people out of cash with the help of accomplices called Jiao, Li and Hu. Another suspect, Xu, is still at large.

After registering a fake company in April last year, Chi and Xu told victims that if they spent 2,600 yuan on their product - a "miracle" quilt and mattress set - they would get a refund of 40 yuan for every new customer. In fact, the set was worth less than 300 yuan.

The following August, Jiao, a victim who complained, was given a job as a manager at the firm. He convinced 30 more people to invest in the business using a similar scam, said Wan Jiancheng, deputy chief prosecutor for Shijingshan district, on Tuesday.

As interest trailed off toward the end of the year, the refunds stopped and several investors raised concerns with the police.

"Victims are aged between 26 and 71 and most were retired or jobless. About 60 percent are over 50," said Guan Zhenhai, a prosecutor in Shijingshan.

Wan added that the case also highlights "new characteristics of illegal activity", explaining that, unlike other pyramid schemes, the group did not use low-level agents but repaid participants based on the amounts they invested.