Police arrest 7 over loansharking scheme
By Zha Minjie |
November 3, 2010, Wednesday
|
Print Edition
Print Edition
SEVEN people have been arrested for an alleged loansharking scheme involving more than 10 million yuan (US$1.5 million), city police said yesterday.
"The gang operated almost like banks do on loans," said Han Gang, an officer investigating the scheme.
Police said the gang operated the scheme from November 2004 to September 2005 and that 20 borrowers have been identified.
Han said he thinks there are more victims in the case.
Police were tipped off last year after a private company in Baoshan District borrowed more than 3.3 million yuan from the suspects. According to the deal, the company had to pay back 10 million yuan.
Some small companies borrowed the money to expand business quickly or pay back bank loans, police said.
According to police, Ying Lihua, in his 60s, was the ring leader. He cheated his Japanese partners into giving him money under the guise he could make decent yearly profits, police said.
Ying then lent the money at monthly interest rates from 7 to 15 percent, police said.
Between 2004 and 2005, the one-year benchmark lending rate was about 5.58 percent. In China, moneylending is viewed as loansharking when the leading rate is at least four times the benchmark rate.
Like banks, the suspects asked borrowers to pledge property as collateral.
In many cases, the suspects threatened borrowers when calling in loans, police said.
They were caught in March.
Authorities said it's difficult to prosecute such cases because few victims are willing to testify.
"The gang operated almost like banks do on loans," said Han Gang, an officer investigating the scheme.
Police said the gang operated the scheme from November 2004 to September 2005 and that 20 borrowers have been identified.
Han said he thinks there are more victims in the case.
Police were tipped off last year after a private company in Baoshan District borrowed more than 3.3 million yuan from the suspects. According to the deal, the company had to pay back 10 million yuan.
Some small companies borrowed the money to expand business quickly or pay back bank loans, police said.
According to police, Ying Lihua, in his 60s, was the ring leader. He cheated his Japanese partners into giving him money under the guise he could make decent yearly profits, police said.
Ying then lent the money at monthly interest rates from 7 to 15 percent, police said.
Between 2004 and 2005, the one-year benchmark lending rate was about 5.58 percent. In China, moneylending is viewed as loansharking when the leading rate is at least four times the benchmark rate.
Like banks, the suspects asked borrowers to pledge property as collateral.
In many cases, the suspects threatened borrowers when calling in loans, police said.
They were caught in March.
Authorities said it's difficult to prosecute such cases because few victims are willing to testify.
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