3 held as police probe claims of lost billions
Print Edition
THREE members of a rural family in north China’s Hebei Province are being investigated in connection with an alleged Ponzi scheme said to have defrauded thousands of families of more than 8 billion yuan (US$1.28 billion), according to The Economic Observer.
It said police in Longyao County had found that Gong Qunhai had established a rural cooperative in July 2007 and opened branches across the province.
Eventually, he is said to have been collecting money from people in 16 cities and provinces by promising high interest rates and offering free wheat flour. According to the newspaper, which quoted “sources close to local officials,” he paid early depositors with money from newcomers.
At first, 37 families were depositing money in the cooperative but by 2013 the number had exceeded 135,000 in Hebei alone, the newspaper said.
But suspicions were aroused in the latter half of 2013 when some depositors who had hoped to withdraw money were turned down. Police and local authorities were alerted.
In December last year, police took Gong, his son and his daughter-in-law into custody.
The newspaper said a woman from Xi’an, capital of northwest China’s Shaanxi Province, had given Gong 2.6 million yuan last November, believing she could double her money in a year.
It also said Gao Yueting, an electrician earning 2,000 yuan a month before he became a cooperative branch manager, had bought a car for 1.6 million yuan and several houses in Hebei within a year. The newspaper reported that he said other managers also made fortunes, including some who bought rows of commercial units.
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