China police arrest 21 in alleged $7.6B investment fraud
Vast majority of its borrowers were fictional entities, according to former company exec
Chinese police arrested 21 employees at China's largest online finance business on suspicion of fleecing 900,000 investors for $7.6 billion, in what could be the biggest financial fraud in Chinese history.
State media outlets reported the arrests late Sunday and state broadcaster CCTV aired purported confessions from two former employees at Ezubao, an Anhui Province outfit that rose from obscurity to become China's largest online financing platform in the span of about 18 months.
Ezubao promised investors that borrowers on its platform would pay back loans at interest rates between nine per cent and 14.6 per cent, but 95 per cent of those borrowers were fictional entities created by Ezubao, a former company executive told investigators.
The company advertised heavily online and bought expensive ad spots that aired just before the widely viewed nightly newscast on CCTV, the state broadcaster, former investors told The Associated Press.
Police shut down the operation in December, prompting scores of protesters to gather in Beijing to demand their money back.