Zhongjin fraud mastermind gets life behind bars

Ten people involved in a 40-billion-yuan (US$5.8 billion) Ponzi scheme were thrown to prison yesterday by Shanghai No. 2 Intermediate People’s Court.

The mastermind behind the scheme, Xu Qin, was sentenced to life imprisonment for illegal fundraising. Nine of his associates received jail terms ranging from five to 12 years.

Xu is well known as the brains behind the Zhongjin finance empire. From October 2011, he set up Zhongjin Finance, Zhongjin Funds and Zhongjin Capital. He later set up a parent company called Guotai.

Xu and another nine senior executives knew Guotai and Zhongjin were unable to make a profit so used online ads, offline promotions and TV commercials to convince people that Zhongjin companies were rich and reputable.

They fabricated financing products with short-term, yet extremely-high, returns to pull in investors.

By April 5, 2016, when their crimes came to light, they had illegally collected more than 40 billion yuan.

Most of the money was spent on “window dressing” such as a spacious office downtown, luxurious cars and advertising expenses.

They still owe more than 12,000 investors more than 4.8 billion yuan. Their personal assets and related company properties have been frozen to pay the debts to investors.

Shanghai police detained the suspect on April 4, 2016 as he was attempting to board a flight out of Shanghai.