More than 40 residents in "the village of BMWs" in east China's Jiangsu Province have been arrested in connection with a multi-million yuan loan shark and pyramid scheme.

Some 200 million yuan (US$31.65 million) has been retrieved, according to Xinhua news agency.

The alleged head of the scheme in Shiji Village, Shi Guobao, is said to have lent money with monthly interest rates of up to 45 percent under the guise of housing projects between July 2009 and May 2011.

Shi persuaded villagers to lend him cash to fund loans, promising high returns, the report said.

Many Shiji residents pooled their money to invest in Shi's loan shark business, some selling businesses and homes.

It was reported that government officials were also tempted by the promise of quick riches and put up cash.

It soon became a pyramid structure with those at the top receiving the highest return - more than 30 percent - with rates decreasing toward the bottom of the pyramid.

The more someone paid in, the higher their position.

The money was lent to Shi Guobao and several other people, ostensibly to lend.

Shiji Village became known as "the village of BMWs" after newly rich villagers splashed out on luxury cars.

The pyramid collapsed in June 2011. Shi was held by local police on July 26 and property worth more than 69 million yuan were retrieved.

The local authority detained another 43 suspects allegedly involved in the scheme.

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