Suspect held over alleged Ponzi scheme
Print Edition
The boss of a loan guarantee firm in central China鈥檚 Henan Province is being investigated on suspicion of operating an investment scheme that cheated more than 4,000 rural families out of nearly 200 million yuan (US$32.2 million).
The suspect, surnamed Zhang, is the chief executive of Henan Haochen Investment and Guarantee Co and is now under house arrest in the provincial capital Zhengzhou, the Beijing Times reported yesterday, citing local police.
Zhang is alleged to have launched a Ponzi scheme in March 2011 from the company鈥檚 branch in Xiping County.
Over the next three years he recruited more than 40 鈥渨ell-respected鈥 members of the local community to sell the scheme to investors with the offer of high interest rates, police were quoted as saying.
The alleged scam came to light last December when the firm stopped making interest payments and Zhang disappeared, the report said.
As part of the investigation, police are looking into the deaths of two of Zhang鈥檚 sales staff, who are thought to have committed suicide when the scheme collapsed, it said.
The two were named as 57-year-old Li Gai, who was found dead at the bottom of a well on April 24, and 63-year-old Zhang Dexi, who hanged himself on May 3, the report said.
A third member of the team, Wu Jincheng, was quoted as saying that he and his colleagues had been duped into working for Zhang on the belief the scheme was legitimate.
鈥淲e had been respected by our fellow villagers in the past and never thought that one day we would do something to harm them,鈥 he said.
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