Were u an investor in this ponzi scheme?

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24 jailed in China over massive US$1.5 billion Ponzi scheme that spanned 10 years, promising investors up to 47pc returns

Mastermind sentenced to life in prison over scam that lured people to buy memberships and fund non-existent loans

PUBLISHED : Tuesday, 01 March, 2016, 1:28pm
UPDATED : Tuesday, 01 March, 2016, 2:25pm

Reuters in Beijing



The defendants jailed after the financial scam in Guangdong province. Photo: SCMP Pictures

A court in southern China has jailed 24 people for fraudulently raising nearly 10 billion yuan (HK$11.8 billion) in one of the country’s biggest financial scams, the state-run news agency Xinhua reported.

The group was convicted of illegally raising funds during the decade to 2012 from more than 230,000 investors, mainly senior citizens who put in their life savings, it said, citing the court.

READ MORE: Chinese police swoop on HK$59 billion ‘record-breaking online Ponzi scheme’

Guangdong Bangjia Leasing Co set up four firms in the southern province and many branches and subsidiaries across China, luring retail investors to buy memberships and fund non-existent loans by promising returns of as much as 47 per cent.

The case spotlights growing risks in a loosely regulated wealth management products industry, which lures millions of unsophisticated retail investors to high-yield products offered by opaque online finance firms and privately run exchanges.

The authorities arrested 21 officials last month at Ezubao, once China’s biggest peer-to-peer lending platform, which collected US$7.6 billion in less than two years from more than 900,000 investors.

Ezubao used savvy marketing, the authorities said, to fund “a complete Ponzi scheme”, that used investor funds to support a lavish lifestyle for company executives.

READ MORE: China’s battle to curb fraud at internet lenders

Hundreds of angry investors also hit the streets in Beijing and Shanghai last year after losing US$6 billion from the Fanya Metals Exchange, which offered investment products promising an annual return of up to 14 per cent.

The Guangzhou Intermediate People’s Court on Monday sentenced the main suspect in the Guangdong fraud, Jiang Hongwei, to life in prison, while the others received terms ranging from three years to 14 years, Xinhua said.

The court has frozen and seized their assets, including 127 vehicles and 43 villas, but prosecutors said few victims might get their money back, since Jiang had squandered millions on luxuries, the agency added.

READ MORE: China’s HK$59 billion online Ponzi scheme: who started it, how did it happen and now what?

Some older investors who lost money in the Guangdong fraud said they were attracted by its fancy branding.

“Their grand exhibition occupied six halls,” Xinhua quoted one elderly woman from Jiangsu province as saying.

“After attending it, I felt assured and decided to invest 700,000 yuan,” she added. “It was all the savings my husband and I had.”






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