Chinese police have arrested 21 people involved in online financing platform Ezubao after accusing the firm of running a Ponzi scheme and bilking more than 50 billion yuan (US$7.6 billion) from investors.
Among those arrested was Ding Ning, the chairman of Ezubao’s parent company, Yucheng Group, according to Xinhua news agency.
Ezubao and Yucheng lured investors with promises of high-interest payouts from leasing projects.
Ezubao, however, didn’t invest the money it collected, but rather used it to pay down earlier debt, and to fund lavish lifestyles for Yucheng’s Ding and several female executives, authorities say.
Prosecutors are said to be seeking restitution for 900,000 investors.
The charges are the first official allegations against Ezubao, whose implosion last year touched off demonstrations in Beijing and several other cities, the Wall Street Journal noted.
Ezubo employees were said to have sought to conceal evidence as prosecutors closed in, at one point burying more than 1,200 accounting books in 80 plastic bags six meters underground in the outskirts of Hefei, the capital of Anhui province.
Part of the boom in peer-to-peer (P2P) platforms—which connect lenders and borrowers—Ezubao had grown quickly pitching high-yielding investments as the economy slowed.
Its collapse would mark one of China’s largest investment frauds in recent years, the Journal noted.
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