Executives charged with illegal fundraising
Print Edition
EIGHT people have been charged with illegal fundraising and fraud by Shanghai prosecutors.
Xu Qin, owner of Shanghai-based Zhongjin Capital Management, and seven of the firm’s senior executives are alleged to have been involved in a 30-billion-yuan (US$4.46 billion) Ponzi scheme.
More than 20 people had been taken into custody for questioning about the case in April, Shanghai police said.
Zhongjin, founded in 2012 with registered capital of 10 million yuan, marketed itself as a private-equity fund group and P2P lending platform with several offices in the city.
It is alleged that Xu and his staff used online and offline promotions and TV commercials to fake the firm’s financial strength and reputation, and fabricated wealth management businesses with high annual returns to attract investors.
Previous media reports said Zhongjin had raised about 34 billion yuan from business partners while offering interest rates on its products up to 2 percent a month. Xu was apprehended at an airport where it was alleged that he was attempting to flee the country.
There have been an increasing number of scams related to online peer-to-peer lending.
Last year, Ezubao, a P2P lending platform, is said to have defrauded about 900,000 investors out of more than 50 billion yuan. The company collapsed as alarm bells rang over the shadow banking system.
A regulation issued by the central bank last December curbed their functions as matchmakers for borrowers and lenders, but P2P platforms have openly touted their ability to manage wealth for clients since 2013.
About a third of the around 4,000 Chinese P2P platforms have been involved in fraud by the end of June, according to Online Lending House, a website that tracks the sector.
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