鈥楢ward-winning鈥 firm was pyramid scheme
Print Edition
A BUSINESSMAN who owned what appeared to be an elite investment company boasting a string of impressive awards was in fact running a pyramid scheme, prosecutors said yesterday.
The company owner, surnamed Hu, was jailed for 12 years for illegal business operations, Huangpu District procuratorate said.
He conned investors out of 80 million (US$12.9 million), prosecutors said.
Hu’s wife, whose name was not given, was jailed for three years for assisting her husband.
The couple had 5 million yuan confiscated and were fined 200,000 yuan.
Hu duped some 800 people nationwide into buying financial products from his company Kongzi (Confucius) International Holding Co Ltd, the court heard.
To win their confidence, he paid for articles on major websites and bought awards for himself and Kongzi.
Impressive awards “won” included “the most influential brand in China’s compound interest financial industry,” “a model company of credit operation in China” and “the most influential international investment person in China.”
Other plaudits included “the best financial innovation award,” gained after “cooperating with” conference and forum organizers, the court heard.
Kongzi was registered by Hu in Hong Kong in 2002, but proved to be a failure in genuine investing.
Having worked in international trade, securities and foreign exchange for 10 years, Hu decided to use his experience to cultivate a convincing veneer while conning investors, prosecutors said.
He set up the Shanghai office of Kongzi in 2006, offering compound interest products promising high and stable returns.
But money paid out simply came from other people investing with Kongzi.
Kongzi registered an office in the British Virgin Islands to showcase its apparent international background and investment scale and to evade the law on China’s mainland.
And while Kongzi’s seven investment consultants had scant financial investment knowledge, they were good at promotions, prosecutors said.
Hu said the most important thing was to highlight the awards rather than anything related to investment, the procuratorate said.
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