Chinese police cracked down on a pyramid scheme sucking illegal funds of about 1 billion yuan (146.56 million US dollars), said the Ministry of Public Security Monday.

The scheme was operated by a company named "Hong Kong Link World International Sci-tech Ltd." registered in Hong Kong in January, 2007, said a statement issued by the ministry.

The company allured people into the ring by claiming that they were selling highly profitable cell phone chips. Through the chips, people would view advertisement on cell phone and receive high reward.

Each initiate was required to pay 999 yuan (146 dollars) for five cell phone chips in a bid to become a distributor at the lowest level.

According to investigations, the company did not actually profit from its so-called chip business. Instead, its major revenue came from enrolling new distributors, the statement said.

The company had enrolled tens of thousands of people into the scheme and sold more than 4.8 million chips, the statement said.

In July, police detained ten senior managers of the company in eastern Jiangsu Province and obtained considerable evidence, it said.

Three chief suspects, Shi Yongbin, Qiang Kexin and Fu Yanping, have been arrested and confessed to their crimes. The rest were in custody or bailed, it said.

Since late July, a number of affiliations of the company were shut down in Shanxi, Shandong and Henan provinces and the crackdown was going on in other parts of the country, the statement said.