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Police hold suspect in cactus fraud scam
By Li Xinran |
January 24, 2009, Saturday
|
Print Edition
Print Edition
A MAN wanted in connection with a fraudulent scheme said to have conned investors out of a total of 480 million yuan (US$70 million) has been seized by Shanghai police.
The man, identified as Sun, was wanted by the Ministry of Public Security for illegally raising millions of yuan from people he led to believe that they could make a fortune investing in cactus plantations.
But police said it was a classic example of a Ponzi scheme - which pays returns to investors out of the money paid by subsequent investors rather than from any profit.
Sun, 50, had been at large for about 10 months before his arrest on Wednesday.
The suspect, who is from Huangshi City in Hubei Province, was reported to have opened a company in Haozhou City in Anhui Province with the purpose of persuading people to invest in his scheme with the promise of a high rate of return for their money.
But after the true nature of the plan was uncovered and police began an investigation, Sun made his escape.
However, Haozhou police were tipped off that Sun might be taking the Z27 train on Wednesday from Shanghai to Hubei's Wuchang at Shanghai South Railway Station.
Police in Shanghai sent officers to cover the station entrances and Sun was recognized by a policewoman when he arrived. He was led away in handcuffs.
Meanwhile, in a separate case, five suspects went on trial on Tuesday in a Shanghai court on charges that they swindled hundreds of millions of yuan in a Ponzi scheme linked to nonexistent taxicab investments.
The man, identified as Sun, was wanted by the Ministry of Public Security for illegally raising millions of yuan from people he led to believe that they could make a fortune investing in cactus plantations.
But police said it was a classic example of a Ponzi scheme - which pays returns to investors out of the money paid by subsequent investors rather than from any profit.
Sun, 50, had been at large for about 10 months before his arrest on Wednesday.
The suspect, who is from Huangshi City in Hubei Province, was reported to have opened a company in Haozhou City in Anhui Province with the purpose of persuading people to invest in his scheme with the promise of a high rate of return for their money.
But after the true nature of the plan was uncovered and police began an investigation, Sun made his escape.
However, Haozhou police were tipped off that Sun might be taking the Z27 train on Wednesday from Shanghai to Hubei's Wuchang at Shanghai South Railway Station.
Police in Shanghai sent officers to cover the station entrances and Sun was recognized by a policewoman when he arrived. He was led away in handcuffs.
Meanwhile, in a separate case, five suspects went on trial on Tuesday in a Shanghai court on charges that they swindled hundreds of millions of yuan in a Ponzi scheme linked to nonexistent taxicab investments.
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