Arrests in US$145m scam targeting Chinese medical travellers

Workings of a medical tourism scam

This scam, in various forms, has been going on since 2014 and various Chinese police forces have been investigating both separate and linked criminal groups. It involves targeting wealthy customers of beauty salons in China with offers of free luxury trips overseas, as a salon loyalty reward.

These customers (called ‘marks’ in confidence-trick terminology) are carefully targeted.  Females are generally chosen; all need to be wealthy enough to afford regular beauty treatment but not rich enough to travel overseas, or pay for health checks or expensive cancer treatment either in or outside of China.  Other crucial factors are that the mark is less well educated, not fluent in a foreign language and healthy.

Once drawn in to the offer, the marks are taken individually or in small groups to an overseas hospital or clinic, with free air travel, free accommodation and free luxury car transport. The hospitals and clinics are usually not ‘back street’ clinics but reputable healthcare providers. Sometimes the health check and medical staff are also genuine.

These targeting and transport processes are not illegal. The scam only begins when the results are ‘translated’ into Chinese. Sometimes the health check and medical staff are also fake, but carried out in a genuine medical facility.

The marks are fraudulently told that the tests have revealed that they have cancer or are at a high risk of getting cancer.

In earlier versions of the scam, the marks were offered instant cancer treatment by a fake doctor at a genuine hospital. This approach however put the criminals at risk from local health and police authorities.

A later version of the scam then developed where the marks were strongly persuaded (i.e. ‘buy our drugs or you will die’) to buy expensive cancer or cancer prevention ‘drugs’ sourced from China. As they are not official medication, then the criminals cannot be prosecuted in any of the countries to which they send people.

The cost of the drugs, that only have a placebo effect, is up to ¥40,000 (US$5,800) a time. One customer who told the police about the scam claimed to have spent ¥6 million (US$860,000) over several years. In the latest scam alone, the criminal gang netted ¥1billion (US$145 million).

Chinese prosecutors claim that this and earlier scams are linked to Dalian Silande Biotechnology, based in northeast Liaoning province.

The cases have yet to come to court.  The exact details of how the laboratory, beauty salon owners, travel organisers and perhaps genuine medical staff and hospitals are involved are not known, and may never become clear.

IMTJ analysis

For legal reasons, IMTJ is unable to speculate as to whether or not any hospital, clinic or medical professional overseas is in any way involved in these scams.

The Chinese police and prosecutors are making a political statement by the release of names and information, implying that such scams will not be tolerated. The message is as much aimed at foreign governments and business, as locals.

The prosecutions are also a way of diverting attention from two known domestic medical scams in China.  These are very similar to the overseas scams, but are aimed at local Chinese and inbound tourists to China.

This kind of scam uses budget or ultra-cheap tours to attract tourists. Once the tourist chooses the tour and after sightseeing, they are taken to a ‘clinic’. The ‘doctor’ will perform a diagnosis and then recommended ‘necessary Chinese medicine materials’. The marks are then persuaded to buy the medicine. If they are lucky, the ingredients are harmless, but the treatments could contain all kinds of toxic substances.

‘Hospital scalpers‘ have also been a problem in China for a long time. These are people who earn their money by enticing people to get medical care at a certain hospital or clinic. They often wait for marks around stations or airports, or in genuine clinics, and may even be dressed as medical staff. They direct the customer away from the ‘busy’, genuine clinic, to a less desirable, cash-only clinic, selling expensive fake medicines or worse.

It is important when analysing these scam stories to note that China does not have a free press. The Chinese police have total control of what detail they release and when, so due caution is needed when drawing conclusions.

It is common in Chinese tour groups for none of the group to speak anything other than Chinese, so medical staff are used to only dealing with organisers. Since the ‘marks’ are chosen as only speaking Chinese, it is likely the criminals ensure that chosen hospitals do not have Chinese speaking medical or other staff.

The Chinese police and government have shown no interest at all in going after overseas hospitals and clinics. So, if these stories have some truth, how does any genuine international healthcare institution allow hundreds of Chinese to go to their hospital, get a medical check, and not then have control over how the results are communicated to patients?