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February 4, 2010

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City property tycoon Yan on trial for embezzlement, fraud

CITY property tycoon Yan Liyan went on trial yesterday on charges of embezzlement and contract fraud. About 2.7 billion yuan (US$395 million) was involved in the case.

Yan, known as a "secret magnate," was listed 56th on the Hurun 100 top millionaires list for China's mainland in 2006. He owned several investment companies but little of his personal information has been disclosed to the public.

On trial with Yan were Ma Jianping, former general manager of AJ Trust, the country's first privately owned non-bank financial institution; Liu Shunxin, former board chairman of AJ Securities; and Chen Hui, former board director of AJ Securities.

Prosecutors alleged in Shanghai No. 1 Intermediate People's Court that Yan, 48, conspired with these former AJ top officers to embezzle 937 million yuan from AJ Trust. They also charged Yan with swindling more than 1.7 billion yuan from AJ Trust by mortgaging false properties.

From November 2000 to September 2001, Yan applied for loans from AJ Trust in the name of his two companies, prosecutors said. Because capital in the account wasn't enough for the big loans, Liu and Chen issued a false proof in the name of AJ Securities to verify Yan had enough capital. Ma also knew that Yan was inadequately capitalized, according to prosecutors.

Yan, as a result, got loans of nearly 1 billion yuan; when the loan term expired, 937 million yuan failed to be returned, prosecutors said.

In January 2003, Yan and Ma allegedly mortgaged a yet-to-be-built underground building in Harbin, Heilongjiang Province, to get 2 billion yuan from AJ Securities. Yan claimed the underground building would house commercial booths. In fact, it was approved to be bomb shelter and Yan didn't have ownership, the court heard.

In May 2004, Yan allegedly pulled the same trick to get another 2 billion yuan from AJ Trust.

Yan denied all the charges at the hearing.

He argued he didn't manage his companies, though they belonged to him. He said his subsidiary companies took out the loans, which he didn't use.

He denied knowledge of the Harbin project, saying it was fully controlled by AJ Securities and that he got no profit from it.

The hearing is scheduled to last for two days.


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