Court refuses case of ripped-off Zhejiang creditors
Source: Xinhua |
March 3, 2012, Saturday
|
Print Edition
Print Edition
AN east China court yesterday refused to hear a lawsuit from nearly 150 creditors who intended to seek state compensation over a large-scale lending scam, a lawyer said.
A loan default by Liren, a company that previously operated in the education, real estate and mining industries, is estimated to have cost 7,000 private creditors a whopping 4.5 billion yuan (US$714 million) in Zhejiang Province.
A total of 147 lenders filed the suit on Monday in the Intermediate People's Court of Wenzhou, accusing of Taishun County and its police department of failing to take action against Liren. The lenders are seeking 68.64 million yuan in compensation.
Zhang Ren, an attorney representing the creditors, said the court refused to take the case, adding that the lawsuit "does not fall within the scope of administrative litigation." But Zhang said the group plans to file a similar suit in the provincial Higher People's Court.
The creditors believe the county government and police turned a blind eye to Liren's lending scam, allowing the company to collect nearly 900 million yuan from private creditors after making false promises of high returns before the company went bankrupt.
Last October, the group said it would stop repaying creditors. Police detained company head Dong Shunsheng on February 3 for alleged fundraising fraud. Most of the company's investments came from private lending. Paying high interest for years led to Liren's downfall, investigators said previously.
When Liren's businesses could no longer generate enough income to allow the company to pay back its creditors, the company started offering even higher interest to draw money from new investors, using the investors' money to pay returns to earlier creditors.
A loan default by Liren, a company that previously operated in the education, real estate and mining industries, is estimated to have cost 7,000 private creditors a whopping 4.5 billion yuan (US$714 million) in Zhejiang Province.
A total of 147 lenders filed the suit on Monday in the Intermediate People's Court of Wenzhou, accusing of Taishun County and its police department of failing to take action against Liren. The lenders are seeking 68.64 million yuan in compensation.
Zhang Ren, an attorney representing the creditors, said the court refused to take the case, adding that the lawsuit "does not fall within the scope of administrative litigation." But Zhang said the group plans to file a similar suit in the provincial Higher People's Court.
The creditors believe the county government and police turned a blind eye to Liren's lending scam, allowing the company to collect nearly 900 million yuan from private creditors after making false promises of high returns before the company went bankrupt.
Last October, the group said it would stop repaying creditors. Police detained company head Dong Shunsheng on February 3 for alleged fundraising fraud. Most of the company's investments came from private lending. Paying high interest for years led to Liren's downfall, investigators said previously.
When Liren's businesses could no longer generate enough income to allow the company to pay back its creditors, the company started offering even higher interest to draw money from new investors, using the investors' money to pay returns to earlier creditors.
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