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September 2, 2009

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Securities scams on the rise

SWINDLES related to securities have been more prevalent in recent months as Shanghai stocks have rallied.

A man, 19, was detained for allegedly defrauding 2.35 million yuan (US$344,000) in a security scam, Baoshan District police said yesterday.

The suspect, Wang Guohua, claimed he knew "inside information" on the city's stock market.

Police said Wang was unemployed and had only worked for six months in a city stockbrokers' firm before being fired in the middle of last year.

Wang had squandered most of the money in local bars, officers said.

He targeted a victim, surnamed Shi, who tipped off police on August 12.

"I looked upon him like my own son," said Shi, the father of one of Wang's classmates. "How could he cheat me like this?"

In May, 2008, Wang told Shi that he could buy a trading warrant on Shi's behalf. The price of the warrant would double within months based on "inside information," Wang claimed.

Shi handed over 50,000 yuan in cash, transferred 700,000 yuan to Wang's bank account and gave the rest in cash over the next seven months.

"I did not even ask him for an IOU," said Shi.

The alleged fraud was not exposed until July when Shi found out Wang had been fired by the security firm.

Shi runs an entertainment venue that provides a place for people to play cards.

He said some of the money he gave Wang was borrowed.

However, Wang did not invest a single yuan on any warrants, police said. He also spent about 800,000 yuan running a motel, which soon closed.

Meanwhile, Pudong New Area police nabbed a stock fraud group and recovered more than 100,000 yuan.

Three suspects have been detained by police pending charges by Pudong New Area Prosecutor's Office.

The victim, surnamed Zhang from Jilin Province in northeast China, saw an advertisement for the Shanghai Wanke Stock Investment Co Ltd on the Internet.

"We guarantee a daily profit of 8 percent!" the firm said in the ad.

Zhang transferred about 100,000 yuan to the company's bank account in Shanghai.

Zhang received 8,000 yuan from the company every day for three days.

There was zilch on the fourth day.

Zhang then found the Website of the company was not available and called police on February 16.

Police officers caught the suspects two days later on February 18 in southeastern China's Fujian Province.

Police said the firm that advertised on the Internet was unregistered.


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