Ezubo ex­ec­u­tives held in $7.6 bil­lion fraud case

The Pak Banker - - COMPANIES/BOSS -

Chi­nese au­thor­i­ties ar­rested 21 ex­ec­u­tives of In­ter­net fi­nance plat­form Ezubo for al­legedly de­fraud­ing in­vestors of more than 50 bil­lion yuan ($7.6 bil­lion) and pos­sess­ing weapons il­le­gally, the of­fi­cial Xin­hua News Agency re­ported.

Al­most 95 per­cent of in­vest­ment projects listed on Ezubo -which means easy-to-lease -- don't ex­ist, Xin­hua re­ported, cit­ing the web­site's owner Ding Ning, who was among those ar­rested. The com­pany at­tracted money from about 900,000 peo­ple by of­fer­ing high in­ter­est rates and ran a ponzi scheme to pay off some in­vestors be­tween July 2014 and last De­cem­ber.

The ar­rests fol­low a clam­p­down by China's bank­ing reg­u­la­tor in De­cem­ber, when it is­sued draft rules to gov­ern the 2,612 on­line peer-to-peer lenders that had helped fuel a stock rally which swiftly turned to bust last sum­mer. More than 1,000 of the so-called P2P firms are "prob­lem­atic," the China Bank­ing Reg­u­la­tory Com­mis­sion said at the time, as it pledged to "cleanse the mar­ket." China launched an in­ves­ti­ga­tion into Ezubo on Dec. 8 af­ter find­ing signs of tight cash flow, and in­di­ca­tions that ex­ec­u­tives had started to move funds and de­stroy ev­i­dence, Xin­hua said. Po­lice used two ex­ca­va­tors and dug for 20 hours to un­earth 80 bags of ev­i­dence that Ezubo ex­ec­u­tives had buried six me­ters un­der­ground on the out­skirts of He­fei, a city in the east­ern prov­ince of An­hui, ac­cord­ing to the re­port.

Rather than pay­ing off in­vestors, ex­ec­u­tives had squan­dered money on per­sonal spend­ing, ad­ver­tise­ments and in­vest- ments in non­per­form­ing as­sets, the news agency said. Ding, the chair­man of Yucheng Group, which ul­ti­mately con­trols Ezubo, gave 550 mil­lion yuan to Yucheng's Pres­i­dent Zhang Min on top of a 130 mil­lion-yuan villa in Sin­ga­pore and a 12 mil­lionyuan pink di­a­mond ring, Xin­hua said. Agri­cul­tural Bank of China Ltd. last month or­dered in­de­pen­dent pay­ment ser­vices to shut ac­cess to on­line lend­ing sites, say­ing that links to P2P firms through its cards had ex­posed the len­der to risks and dam­aged its rep­u­ta­tion.

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