Anger as Ponzi scheme folds
By Ni Yinbin and Zhao Wen |
May 25, 2011, Wednesday
|
Print Edition
Print Edition
TO consumers offered cars and Apple gadgets at an 85% discount, it sounded like a deal that was too good to be true. And for most it was.
Police have detained the head of a Shanghai trading company after its Ponzi scheme allegedly swindled more than 70 million yuan (US$10.8 million) out of hundreds of consumers.
A Ponzi scheme pays returns to investors, not from any actual profit earned, but from their own money or money paid by subsequent investors.
Customers were told they could buy cars or Apple products at huge discounts.
After paying, some did receive their bargain buys, but the majority fell victim to the scam after the company suddenly closed last week.
Shan Yuanyuan, president of the Shanghai Sanco Trade Co Ltd, is now in custody for alleged contract fraud. Police are investigating An Weibin, the company's legal representative, and other staff.
"I just want my money back," said a man surnamed Wang, who paid 1.5 million yuan to the company to purchase seven cars in March and April.
"Most of the money belonged to family and friends who entrusted us to buy the cars with discounts of between 75 percent and 85 percent."
Some of the cars were hard to obtain at full price in the market because of high demand, yet Shanghai Sanco promised to deliver them within 45 days with considerable discounts.
"They claimed they had connections with the manufacturers and the government and could get the cars while others couldn't," Wang told Shanghai Daily yesterday.
"And some of the customers did get their cars at the low prices."
Wang's wife, surnamed Cai, who works for a car sales company, said the salesman they dealt with was a former colleague and she trusted him.
The couple contacted the salesman when it was apparent the cars were not coming.
"He said he was also cheated," Wang told Shanghai Daily yesterday. "We really don't know how to face our families and friends."
Most customers, who heard about the company through word of mouth, had similar experiences. But as some did get cars and gadgets at a low price, people signed up.
Yesterday, Sanco's office at the New Jinqiao Building in Pudong was sealed.
Insiders said angry customers stormed the office last Thursday and helped themselves to 1 million yuan worth of Apple products as compensation for their losses. Then, the whole story emerged.
"There must be some bigger guys behind this," said another victim surnamed Li, who paid 3 million yuan for cars but received nothing. "I don't believe Shan alone could design such a huge plot."
According to Chinese Criminal Law, if guilty, the suspects of Ponzi schemes could be sentenced to more than 10 years in prison or face life sentences if the sum exceeds 10 million yuan, said Wu Dong, a local lawyer.
Police have detained the head of a Shanghai trading company after its Ponzi scheme allegedly swindled more than 70 million yuan (US$10.8 million) out of hundreds of consumers.
A Ponzi scheme pays returns to investors, not from any actual profit earned, but from their own money or money paid by subsequent investors.
Customers were told they could buy cars or Apple products at huge discounts.
After paying, some did receive their bargain buys, but the majority fell victim to the scam after the company suddenly closed last week.
Shan Yuanyuan, president of the Shanghai Sanco Trade Co Ltd, is now in custody for alleged contract fraud. Police are investigating An Weibin, the company's legal representative, and other staff.
"I just want my money back," said a man surnamed Wang, who paid 1.5 million yuan to the company to purchase seven cars in March and April.
"Most of the money belonged to family and friends who entrusted us to buy the cars with discounts of between 75 percent and 85 percent."
Some of the cars were hard to obtain at full price in the market because of high demand, yet Shanghai Sanco promised to deliver them within 45 days with considerable discounts.
"They claimed they had connections with the manufacturers and the government and could get the cars while others couldn't," Wang told Shanghai Daily yesterday.
"And some of the customers did get their cars at the low prices."
Wang's wife, surnamed Cai, who works for a car sales company, said the salesman they dealt with was a former colleague and she trusted him.
The couple contacted the salesman when it was apparent the cars were not coming.
"He said he was also cheated," Wang told Shanghai Daily yesterday. "We really don't know how to face our families and friends."
Most customers, who heard about the company through word of mouth, had similar experiences. But as some did get cars and gadgets at a low price, people signed up.
Yesterday, Sanco's office at the New Jinqiao Building in Pudong was sealed.
Insiders said angry customers stormed the office last Thursday and helped themselves to 1 million yuan worth of Apple products as compensation for their losses. Then, the whole story emerged.
"There must be some bigger guys behind this," said another victim surnamed Li, who paid 3 million yuan for cars but received nothing. "I don't believe Shan alone could design such a huge plot."
According to Chinese Criminal Law, if guilty, the suspects of Ponzi schemes could be sentenced to more than 10 years in prison or face life sentences if the sum exceeds 10 million yuan, said Wu Dong, a local lawyer.
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