Death sentence for loans fraud
Source: Agencies |
May 21, 2013, Tuesday
|
Print Edition
Print Edition
A BUSINESSWOMAN in east China has been sentenced to death for defrauding investors as the government tightens controls on the informal financing that is widely used by entrepreneurs.
Lin Haiyan was convicted of "illegal fundraising" for collecting 640 million yuan (US$100 million) from investors by promising high returns and low risk, according to a statement by the Intermediate People's Court of Wenzhou of Zhejiang Province.
It said the scheme collapsed in October 2011 and 428 million yuan could not be recovered.
Lin started raising money from friends, relatives and coworkers in 2007, according to a statement on the court website.
It said Lin told investors the money was going into stock offerings and bank deposits but she used it to speculate in stocks instead. Even as losses mounted, Lin continued to raise money until the scheme collapsed, the court said.
"Lin Haiyan's actions constituted financial fraud that caused huge losses and seriously damaged the people and the state," the statement said.
The case highlighted potential abuses in largely unregulated informal lending that supports entrepreneurs who generate new jobs and wealth but often cannot get loans from the state-owned banking industry.
The underground credit market is estimated by China's central bank and private sector analysts at 2 to 4 trillion yuan, or as much as 7 percent of total lending. In some areas, informal lending exceeds that of official banks.
Many households provide money for private lending in an effort to get a better return than the low deposit rates paid by Chinese banks, which effectively force depositors to subsidize low-interest loans to state industry.
Last year, another businesswoman from Wenzhou was sentenced to death on illegal fundraising charges. Wu Ying was found guilty of improperly raising 770 million yuan from investors. China's supreme court overturned the death sentence following an outcry over the severity of the penalty and she was sentenced to death with a two-year reprieve, which is usually commuted to a long prison term.
Lin Haiyan was convicted of "illegal fundraising" for collecting 640 million yuan (US$100 million) from investors by promising high returns and low risk, according to a statement by the Intermediate People's Court of Wenzhou of Zhejiang Province.
It said the scheme collapsed in October 2011 and 428 million yuan could not be recovered.
Lin started raising money from friends, relatives and coworkers in 2007, according to a statement on the court website.
It said Lin told investors the money was going into stock offerings and bank deposits but she used it to speculate in stocks instead. Even as losses mounted, Lin continued to raise money until the scheme collapsed, the court said.
"Lin Haiyan's actions constituted financial fraud that caused huge losses and seriously damaged the people and the state," the statement said.
The case highlighted potential abuses in largely unregulated informal lending that supports entrepreneurs who generate new jobs and wealth but often cannot get loans from the state-owned banking industry.
The underground credit market is estimated by China's central bank and private sector analysts at 2 to 4 trillion yuan, or as much as 7 percent of total lending. In some areas, informal lending exceeds that of official banks.
Many households provide money for private lending in an effort to get a better return than the low deposit rates paid by Chinese banks, which effectively force depositors to subsidize low-interest loans to state industry.
Last year, another businesswoman from Wenzhou was sentenced to death on illegal fundraising charges. Wu Ying was found guilty of improperly raising 770 million yuan from investors. China's supreme court overturned the death sentence following an outcry over the severity of the penalty and she was sentenced to death with a two-year reprieve, which is usually commuted to a long prison term.
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