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April 17, 2012

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Zhejiang company accused of bilking over 1,000 investors

SHANGHAI police are investigating a Zhejiang Province-based company accused of cheating more than 1,000-plus people out of hundreds of millions of yuan they invested to purchase or rent stores across the city from the company.

The victims told China National Radio that they paid the money to purchase or rent stores in shopping malls or business areas in the city's Jinshan, Huangpu and Jing'an districts from the Sixiong Group in four of its developing projects.

They said they invested after being promised by the company to gain profits each year.

But about one year after they paid the money in March last year, the victims were shocked to learn that the firm's CEO has been detained by police for illegally absorbing public deposit.

They were equally surprised to see the company facing serious financial problems and the stores, for which they paid an average of about 1.5 million yuan (US$237,960), never got the money, according to the radio report.

Many of the victims told CNR that they invested in the company's projects after it promised them that each year they would receive up to 10 percent of the total price of the stores.

Some stores were to open at a shopping mall near the Bund, which was a good location for vendors to do small businesses with visitors, according to the victims.

"It seemed like we will surely be the winner in the business and there were no risks," a victim told CNR, "The company did a lot of promotion work on its projects, boasting that the government was working with them to develop the area, which was a lie."

A victim surnamed Tao said the company promised him that the store would be open in October last year, but it always found reasons to delay.

"The company said the workers failed to decorate the store because the days were too hot, and in the beginning of the year, it replied to me that the workers were all going back to their hometowns for family reunions," said Tao.

Doubts on bankruptcy

Some victims said they doubted whether the company was facing bankruptcy, as they found that it used their money to pay its debts.

Yu Bo, a company official, admitted that the company was "facing problems" and the stores could not be turned over to their buyers because construction workers left after the firm's CEO was arrested, according to the CNR report.

Shanghai police said they were still investing, and the exact number of victims and money involved was still unknown.

An official surnamed Guo with the Shanghai police told CNR that the victims' investment in the company's projects to gain interest from was illegal, and so they should bare the risk from the investment.


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