Film investment con artists to face prosecution
A recent investment scam in the film and television industry, involving more than 650 million yuan ($91.5 million), has left over 3,000 individuals nationwide deceived, the official WeChat account of the Committee of Political and Legal Affairs of the Communist Party of China Central Committee unveiled on Wednesday.
This case involved four companies and 12 films, five of which have already been released, it said. Currently, 45 individuals involved in the case have been transferred to the procuratorate for prosecution.
Procuratorate and public security organs in Lanzhou in Northwest China’s Gansu province have issued a joint notice, publicly soliciting more information on the case.
In 2022, police in Lanzhou investigated a film investment fraud case orchestrated by a suspect surnamed Li. Li’s group is alleged to have meticulously crafted its tactics to entice investors into purchasing shares in movies, inflating production costs and anticipated box office profits while guiding investors to acquire “profit-shares” in the films.
It’s thought the suspects only used a small portion of the victims’ funds to purchase shares from the film production companies, diverting the majority of the funds into multiple personal bank accounts.
With cooperation from police in various regions, the Lanzhou police investigated multiple locations in Beijing, as well as in Shenzhen and Dongguan in Guangdong province, seizing numerous computers, mobile phones, bogus contracts between the suspects and victims and scripted dialogues. The main suspects involved in the case have all been apprehended.
Pang Jie, a police officer from Lanzhou involved in the case, said that the fraud group held shareholdings across four companies and started their fraudulent activities in 2019. The largest sum defrauded from a single victim exceeded 7 million yuan.
According to Li, they hired promotion companies to send individuals posing as “mentors” to offer purportedly professional stock recommendations in various WeChat and QQ groups for the purpose of stock investment to earn the trust of victims.
Subsequently, citing a downturn in the stock market with diminished profits and increased risks, they guided the victims toward investing in film projects. The “mentors” claimed to possess connections in the film industry and promised profits after the movies were released.
To bolster credibility, the “mentors” led the victims to Beijing to visit prominent domestic film and television companies, but only allowed them to take photographs around the buildings.
This type of fraud is particularly insidious as the film projects in which the victims invested do indeed exist, with several projects having already been released, the authority said. Furthermore, the film companies in which the fraud group held shares were legally registered, and the contracts signed by the fraud group with the film production companies were authentic and valid.
However, the investment amounts stated in the agreements between the fraud group and the investors far exceeded the actual investment in the films, constituting suspected fraud.
“If the actual investment in a movie is 40 million yuan, and the suspects purchased a portion of the shares in the movie project, when signing agreements with the victims, the fraud group exaggerated the total investment several times over,” Pang said.
He Xiaodong, the deputy head of the Chengguan district branch of the Lanzhou Public Security Bureau, said it is difficult for the victims to identify this type of fraud, and sometimes they believe their investments have failed. Therefore, the number of victims nationwide who have reported the case to public security departments is less than 100 in this case.
The police will intensify efforts to recover funds and conduct thorough investigations into the properties and various accounts of the suspects, particularly focusing on suspicious amounts of funds and significant cash withdrawals, he said.