Some 900,000 investors in China were played in what’s turned out to be the scam of the century carried out by peer-to-peer lender Ezubao. Having snatched upwards of 50 billion yuan ($7.6 billion) off their victims, detained higher-ups have confirmed that their company was indeed “a complete Ponzi scheme.”
It’s is being called the largest ever case of investor fraud in Chinese history and even the largest case — by number of victims — in the world.
Among the 21 arrested is chairman Zhang Min of the Yucheng Group, the parent firm that launched Ezubao in 2014, who confessed to the completeness of the Ponzi scheme whilst in police detention.
Also in custody is Ezubao’s risk controller Yong Lei, who revealed that 95% of the company’s projects were totally fabricated.
Apparently, Ezubao had promised investors annual returns from 9% to 14.6%; however, on the down-low, Yucheng chairman Ding Ning was spending over 1 billion yuan on his beloveds, including a charmingly nepotistic monthly salary of 1 million yuan to his brother Ding Dian.
Even more interestingly, Ding Ning was apparently romancing the chairman himself with such gifts as a 12 million yuan diamond ring and a 130 million yuan villa in Singapore.
After a 20-hour all-out excavation, police found 1,200 of the company’s account books buried six feet underground somewhere in Anhui.
These latest confessions and discoveries are the hard-won fruits of an investigation into Ezubao that started in December. Ezubao’s website has since been shut down, and its assets sealed and frozen. The Ministry of Public Security currently has a website for victims to register and reclaim their money in the works… just as soon as police finish tracking and excavating all the money flows.
With too many rich folk for its own good, China’s dubious “wealth management” industry and overabundance of P2P lenders have been causes for concern for some time, but the Ezubao case has somehow succeeded in making the $24 billion lost in last year’s financial scams look like small potatoes.
One can only wish for the best for these poor fools as they protest to get their money back:
Best of luck, guys.