www.CharlesJeromeWare.com
Unlike in America, committing fraud, Ponzi schemes, investment schemes and other white-collar crimes in China can earn the defendant the death penalty. And, women are no exception
Just recently a Chinese court sentenced a businesswoman to death after prosecutors accused her of running a Ponzi scheme that defrauded investors of about $70 million, shining a light on potential abuses in China's underground banking system and the severe penalties they can draw.
According to a statement posted this week on the court website of the city of Wenzhou—known for its thriving private sector and informal banking networks—39-year old Lin Haiyan started soliciting funds in 2007, promising investors high returns at low risk. The scheme unraveled in October 2011, with Ms. Lin owing her private backers 428 million yuan, it said.
Some other notable examples of death sentences for fraud in China include:
- Wu Ying, Nicknamed 'Rich Sister,' she was sentenced in 2009 for swindling 11 investors out of 380 million yuan. In April 2012, her sentence was stayed. A woman.
- Du Yimin, Executed in August 2009 after her conviction for illegally raising more than 700 million yuan for investments ranging from beauty parlors to cosmetics to real estate. Another woman.
- Wang Caiping, Sentenced in April 2012 after she completes two years in prison for borrowing more than 100 million yuan ($16 million) from victims along with her brother. Another woman.
- Wang Zhendong, The general manager of an ant-breeding project was executed in November 2008 after being convicted for stealing three billion yuan from investors. Another woman.
Informal sources of credit have long been the lifeblood of China's small private firms that typically can't access loans or other forms of finances from the country's formal financial institutions. But gathering funds to invest without regulatory approval is a legal gray area, and authorities sometimes crack down hard when investors lose money.
Analysts say a flood of cash that entered the economy following a massive stimulus push in 2009—China's response to the global financial crisis—exacerbated the potential for loans to go wrong in the informal lending sector as private financiers looked for places to put the additional cash. Such stumbles have put the underground lending sector under scrutiny, prompting calls from top Chinese leaders to bring it out in the open and for banks to broaden lending efforts to small businesses.
As of the end of April, 1,449 people had been "seriously punished"–a designation that includes the death penalty and more than five years imprisonment—for illegal fundraising since 2011, said Miao Youshui, a senior judge on the People's Supreme Court, China's highest judicial body, at a recent news conference. In total, 4,170 people were convicted over the same period for similar economic crimes, he said.
"I'm not optimistic" about controlling the spread of illegal fundraising, said Du Jinfu, the head of discipline inspection at China's banking regulator, and a member of a task force set up to tackle economic crimes. "One factor is the high frequency of cases. Also, the scope is broadening, with cases appearing in most cities…It affects the employed and retired, the rich and the poor."
According to a statement from the task force, illegal fundraising refers to soliciting funds publicly from private savers by offering a high return without regulatory approval to operate. But groups that oppose China's use of the death penalty in economic cases say the definition is fuzzy enough to encompass the informal lending that many businesses depend upon.
"The distinction between illegal fundraising and private lending still remains unclear," the Dui Hua Foundation, a San Francisco-based human-rights group said February in a statement on its Web site.
China doesn't publicly report execution figures, but Dui Hua estimates that 4,000 prisoners were executed in 2011. China's death-penalty rates are higher than any other country in the world, according to Dui Hua figures. Amnesty International no longer reports execution data from China, but believes the yearly figure is "in the thousands."
According to the Wenzhou court's statement, Ms. Lin formally started her own investment company in May 2008, collecting funds from friends, colleagues, old classmates relatives, neighbors and others. The statement said she told investors that the funds were being invested in initial public offerings and share placements and even bank deposits, but instead she was speculating on futures and stocks, and using money raised by new investors to pay older clients their promised return.
Even as the investments turned sour, Ms. Lin continued to solicit new funds, the statement said. By October 2011 Ms. Lin could no longer cover up the extent of her cash-flow problems, it said.
[The Wall Street Journal, Saturday-Sunday, May 18-19, 2013, www.WSJ.com/"Investor Scheme Leads to Death Sentence"]
No comments:
Post a Comment