9 held in illegal investment scam worth billions of yuan

Shanghai police have arrested nine suspects for running a Ponzi investment scheme and defrauding investors to the tune of 13 billion yuan (US$2 billion).

Nine suspects have been arrested for allegedly defrauding investors of over 13 billion yuan (US$2 billion), Shanghai police said yesterday.

Only a small portion of the money was invested, and the rest of the money was used to pay off previous debtors, and promoting the company through advertisements and paying high perks of the managers.

The suspects were arrested on the charge of “illegally absorbing public deposits.”

The company, Jingyi‚ is headquartered in Putuo District, and its “actual controller,” a suspect surnamed Kong, surrendered last month.

From June 2014 to May 2017, the suspects had promised investors an annual interest rates of 8.4 to 16.2 percent. They made them sign contracts with some financial leasing companies related to the company, police said.

The investors were allegedly lured by online advertising and branch offices of the company, and their money ended up in the bank accounts of the company and its related companies.

Police said it has yet to determine how many people have fallen victim to the fraudulent scheme.

A small portion of the investors' money was invested in the food industry, solar energy projects, shopping malls, hotels and car leasing in different parts of the country, while a huge chunk was used for false advertising in which the company claimed that the value of the businesses it had invested in had increased tens of times, police said.

Most of the money was used to pay back previous investors and the rest covered the company’s operational costs and high salaries of its  managers.

Kong himself enjoyed a luxurious life, buying luxury cars and watches besides gambling. He was sentenced to four years and six months in jail in 2008 in Wenzhou City, Zhejiang Province, for theft, police said.


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