Illegal fundraising is the biggest headache for financial crime prosecutors

Credit card frauds are still the most common financial crime, prosecutors say, but illegal fundraising is much more damaging.

Credit card fraud remains the most common financial crime — but illegal fundraising poses a much severer risk, prosecutors said.

From 2012 to 2016, prosecutors of Hongkou District investigated 369 card frauds, about three-quarters of the district's total 488 financial cases.

However, the number is decreasing year by year, from nearly 150 in 2012 to 25 in 2016. Also, the majority of victims lost less than 50,000 yuan (US$7,585).

In contrast, illegal fundraising frauds and illegal pooling of public savings are increasing in number — especially after 2015 when the online peer-to-peer lending platforms started to spring up. There were 4 such cases in 2014, 17 in 2015, and 46 in 2016. 

Usually, hundreds or thousands of victims were embroiled in one single case, involving with millions of yuan.

Nearly 10 percent of the cases involved 50 million yuan or more, and one case involved 2.4 billion yuan, prosecutors said.

Companies who engage in illegal fundraising disguise their actions by posing as legal and proper financial institutions, renting downtown upmarket offices, and promising extremely high returns to investors, many of whom are senior citizens, prosecutors said.

In one case, a man surnamed Wang illegally collected more than 47 million yuan from December 2013 to July 2015, by promising high returns on an urban housing project. He is now awaiting trial, with nearly 40 million yuan debts owed to investors.

On Thursday, it was announced that "a cooperation mechanism," involving Hongkou police, prosecutors, judges and financial officials, has been set up as to better supervise the market.


Special Reports
Top