A court in southern China has jailed 24 people for fraudulently raising nearly 10 billion yuan (US$1.5 billion) in one of the country’s biggest financial scams.
The group was convicted of illegally raising funds from more than 230,000 investors, mainly senior citizens who put in their life savings, Reuters reports, citing the official Xinhua news agency.
The scam took place over 10 years to 2012.
Guangdong Bangjia Leasing Co. set up four firms in the southern province and many branches and subsidiaries across China, luring retail investors to buy memberships and fund non-existent loans by promising returns of as much as 47 percent.
The Guangzhou Intermediate People’s Court on Monday sentenced the main suspect, Jiang Hongwei, to life in prison, while the others received terms ranging from three years to 14 years, Xinhua said.
The court has frozen and seized their assets, including 127 vehicles and 43 villas, but prosecutors said few victims might get their money back, since Jiang had squandered millions on luxuries, the agency added.
Some older investors who lost money in the fraud said they were attracted by its fancy branding.
“Their grand exhibition occupied six halls,” Xinhua quoted one elderly woman from Jiangsu province as saying.
The case spotlights growing risks in a loosely regulated wealth management products industry, which lures millions of unsophisticated retail investors to high-yield products offered by opaque online finance firms and privately run exchanges.
In February, authorities arrested 21 officials of Ezubao, once China’s biggest peer-to-peer lending platform, which collected US$7.6 billion in less than two years from more than 900,000 investors.
Ezubao used savvy marketing, authorities said, to fund “a complete Ponzi scheme” that used investor funds to support a lavish lifestyle for company executives.
Last year, hundreds of angry investors hit the streets in Beijing and Shanghai after losing US$6 billion from the Fanya Metals Exchange, which offered investment products promising an annual return of up to 14 percent.
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