SHANGHAI (Reuters) - A court in China sentenced 10 people to prison for running “a 40 billion yuan ($5.84 billion) Ponzi scheme”, the collapse of which sparked protests by jilted investors and made headlines, state media reported on Thursday.
Xu Qin, a founder of Zhongjin Capital and related companies, was given a life sentence by the Shanghai No. 2 Intermediate People’s Court on Wednesday, the official Shanghai Daily newspaper reported. The court gave nine others sentences ranging from five to 12 years, it said.
The Zhongjin empire grew quickly and even opened an imposing office on Shanghai’s historic - and expensive - Bund, luring eager investors seeking the double-digit returns it promised on short-term financing products, part of a then-thriving “shadow banking” sector.
However, the image of riches and success that it cultivated came crashing down in early 2016. Police arrested 21 executives linked to Zhongjin, including Xu, on suspicion of “illegal fundraising”.
The Shanghai Daily said Xu and the nine others who were sentenced on Wednesday had been 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,” it said. They had illegally collected 40 billion yuan, it said, and much of the money was spent cultivating an image of wealth and reputability.
Xu was detained on April 4, 2016, attempting to board a flight out of Shanghai, the newspaper said.
The 10 people sentenced still owed more than 12,000 investors more than 4.8 billion yuan, it said. Their personal assets and company properties were frozen to pay debts.
Reporting by John Ruwitch; Editing by Paul Tait