Senior home chain in trouble for alleged illegal fund-raising

A local company together with a senior home chain it funded is accused of charging 239 people tens of millions of yuan for services never delivered.

A local company is under investigation for alleged illegal fund-raising through a senior home it funded.

Shanghai Civil Administration Bureau said on Thursday that the company, Kaichen, together with the senior home chain, Kanglefu, has charged 239 people a total of over 28 million yuan (US$4.4 million) so far this month for alleged "membership for reservation of senior care services," — but that no service has been delivered.

The 239, who only received a receipt that didn't state what the payment was for, were allegedly promised annual returns of 9 to 12 percent of the money they invested.

They were also promised preferential treatment for consideration of a place at a senior home at a future date — the city currently has a shortage of senior home places.

The 239 paid up to 700,000 yuan each to the company, the bureau said, adding that some large payments, up to 500,000 yuan, were directly transferred to the private account of Xia Yuqiu, the legal representative of the company.

Xia is the wife of Zhong Decai, legal representative of the senior home.

Investigation started this month after suspicions were raised at the bureau from a regular inspection of the service quality and business operation of city senior homes.

The bureau said it has demanded the company return all the investment monies paid to it, and that so far about 90 percent has been returned.

Police in Putuo District have been investigating the case, and district market inspectors will hand out administrative punishment to the company if further investigation proves irregularities in its operation, according to the bureau.

The Kanglefu chain of senior homes is headquartered in Putuo District, with branches in the Pudong New Area, Jinshan District and some cities in neighboring Zhejiang Province, according to its website.

This is not the first time Kanglefu has been in trouble.

At the beginning of last year, auditors found irregular charging of money in its operations.

The chain was found to have charged over 46 million yuan to senior people living in its complexes in the name of one-to-five-year or lifelong membership fees.

The bureau told Kanglefu to return all the  money paid to its tenants, and Zhong and Xia were prohibited from traveling abroad.

All of this money was returned by last month and the senior home was also required to sign new contracts with its tenants that ensure regular charging for services on a monthly basis, the bureau said.

In 2016, Kanglefu was placed on a list of "unqualified non-profit senior homes operated by private companies" after failing the annual inspection of the bureau.

The number of people aged 60 or above had reached 4.58 million in Shanghai by the end of 2016, or 31.6 percent of permanent residents. 

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