Shan­lin Fi­nance Founder Sen­tenced to Life in Prison for 70B Yuan P2P Ponzi Scheme

The man at the cen­tre of an im­mense P2P Ponzi scheme that il­le­gally raised over 70 bil­lion yuan from more than 620,000 in­vestors has re­ceived a life sen­tence from the Chi­nese court sys­tem.

On 24 July the Shang­hai First In­ter­me­di­ate Court de­liv­ered its ver­dict on the fi­nan­cial fraud case in­volv­ing Shan­lin (Shang­hai) Fi­nan­cial In­for­ma­tion Ser­vices Co., Ltd.  and 12 re­lated in­di­vid­u­als, in­clud­ing com­pany founder Zhou Boyun .

The court im­posed a fine of 1.5 bil­lion yuan upon Shan­lin Fi­nance for fraud­u­lent fund-rais­ing, as well as gave life sen­tences to Zhou Boyun and Tian Jing­sheng along­side fines of 70 mil­lion yuan and 8 mil­lion yuan re­spec­tively.

The ten other de­fen­dants re­ceived prison sen­tences of be­tween 16 to 60 years, and fines of be­tween 500,000 yuan and 2.5 mil­lion yuan.

Shan­lin Fi­nance was first founded by Zhou Boyun in Oc­to­ber 2013 with reg­is­tered cap­i­tal of 1.2 bil­lion, and went on to es­tab­lish over 1000 en­ti­ties in 29 provinces around China to pro­vide a range of on­line fi­nan­cial ser­vices.

The court found that Shan­lin Fi­nance had “adopted meth­ods in­clud­ing false es­tab­lish­ment of cred­i­tor’s rights, false es­tab­lish­ment of lender in­for­ma­tion and false ad­ver­tis­ing to seek il­le­gal prof­its…and il­le­gally raised a to­tal of over 73.687 bil­lion yuan in funds from over 620,000 in­vestors.”

These funds were all trans­ferred to Shan­lin Fi­nance and a bank ac­count that was con­trolled by Zhou Boyun, with 56.759 bil­lion yuan used to make pay­ments of prin­ci­pal and in­ter­est to pre­vi­ous in­vestors, and 3.463 bil­lion yuan used for in­vest­ment pro­jects, the pur­chase of com­pany eq­uity and the pur­chase of over­seas shares.

A fur­ther 3.539 bil­lion yuan was used by Shan­lin for both on­line and of­fline lend­ing pur­poses, with the re­main­ing amount used for op­er­at­ing ex­penses, salaries, com­mis­sions and loans to af­fil­i­ates.

Ac­cord­ing to the court the Shan­lin Fi­nance Ponzi scheme caused real eco­nomic losses of over 21.7 bil­lion yuan to more than 250,000 in­vestors.

In April 2018 the Shang­hai po­lice an­nounced via their of­fi­cial Weibo ac­count that the le­gal rep­re­sen­ta­tive of Shan­lin Fi­nance had been ar­rested and an in­ves­ti­ga­tion had been launched by pub­lic se­cu­rity of­fi­cials.

Ac­cord­ing to a sub­se­quent an­nounce­ment a to­tal of eight in­di­vid­u­als had been ar­rested for “cre­at­ing fund pools by ob­tain­ing funds from the pub­lic via a range of wealth man­age­ment prod­ucts of dif­fer­ent ma­tu­ri­ties and re­turns, to be pro­vided to Zhao Boyun for dis­cre­tionary us­age.”

In Au­gust 2019 the the Pudong branch of Shang­hai’s pub­lic se­cu­rity bu­reau an­nounced that a trial of Shan­lin Fi­nance ex­ec­u­tives had com­menced, and that po­lice had al­ready seized 1.6 bil­lion yuan in cash as well as frozen re­lated bank ac­counts.

In 2019 Chi­nese reg­u­la­tors also launched a heavy-handed crack­down on do­mes­tic P2P lend­ing due to con­cerns over wide­spread fraud and crim­i­nal con­duct in the sec­tor.

Posted by china banking news