Head of alleged $7.1b scam nabbed in China
CHINESE authorities have detained the head of a group of finance companies accused of defrauding more than 100,000 investors, as he sought to board a private plane allegedly hired to take him to Europe for his wedding, media reports and police said.
Xu Qin, said to be the "controller" of the Zhongjin-linked companies, was held at an airport in Shanghai as he attempted to fly to Italy for the ceremony with other executives, on an aircraft chartered for the purpose, media reports said.
He was among more than 20 managers of Zhongjin detained by police and accused of swindling investors through falsifying operations and inflating business performance, according to a police statement released on Wednesday.
The Zhongjin stable of companies, headquartered in Shanghai, pooled money from investors for a variety of funds and projects, with the promise of high returns.
Police gave no estimates for the size of the case but reports said it involved more than 130,000 investors with the firm raising at least 34 billion yuan (S$7.1 billion) in funds.
Authorities said Xu registered more than 50 subsidiaries and controlled over 100 linked companies.
The case is the latest financial fraud to emerge as China's economy slows, recording its lowest growth in a quarter of a century last year.
In a recent scandal, peer-to-peer (P2P) lending firm Ezubao bilked 900,000 investors out of US$7.6 billion (S$10.3 billion) by offering high interest rates which it was unable to pay, in what one executive described in a televised confession as a "typical Ponzi scheme".
A wealth management firm, Shanghai-based Jinlu Financial Advisors, has also struggled to pay back investors, China Business News said on its website.
An associated company this week announced plans to make payments within two years.
In the south-western city of Kunming, private financing firm Yunnan Pan-Asia Folk Capital Registration Service Centre stopped making some payments to investors in November.
That sparked a public protest in February, said an investor.