Some finance fraud cases down, others up

While the number of cases involving financial crimes declined slightly last year, those involving a large number of victims have increased, China’s top procuratorate said on Thursday.

Some 35,300 people connected with about 21,800 cases of financial crime were prosecuted last year, a decrease of 7.9 percent and 3 percent respectively from 2016, according to the Supreme People’s Procuratorate.

“The decline is due to the public security and judicial organs stepping up their efforts against such crimes,” said Wan Chun, director of the law and policy research office of the SPP.

However, he said, new forms of crime, in the guise of financial innovation and usually using the internet, have been rising in the past year. Such cases are more complicated, hidden and deceptive, and often involve many victims.

Last year, procuratorial organs at all levels charged about 17,000 people in 8,200 cases for illegal fundraising. Some 7,200 people in 2,200 cases were prosecuted for organizing pyramid schemes.

“In such crimes, we found that the suspects are more professional and have financial backgrounds, and they know how to cover up their crimes and avoid investigation,” Wan said. “The gangs usually set up companies with complete organizational structures and fixed places of business, which are more likely to deceive the public.”

In a typical case, a man named Zhou Hui founded an investment company in Zhejiang province in 2011 that provided an online platform in which those seeking money for projects from investors could publish bidding information. The investors were promised their money back — with a profit — after the project.

From 2011 to 2013, Zhou set up 34 accounts for phony projects and used them to raise funds by publishing false mortgage information and offering investors 20 percent of the profits.

He raised 1 billion yuan ($159 million) from about 1,580 people, and paid 690 million yuan back to investors. The rest he used to purchase property and cars.

In 2017, Zhou was sentenced to 15 years in prison for financial fraud.

Zhao Baoqi, the prosecutor from Zhejiang in charge of the case, said the scheme was not financial innovation but illegal fundraising in the guise of person-to-person lending.

“The investors lacked awareness of the scheme and were tempted by the high rate of interest. People should use good judgment when offered high-interest returns,” he said.

People should use good judgment when offered high-interest returns.” Zhao Baoqi, a prosecutor from Zhejiang province