HONG KONG |
(Reuters) - A property developer in the eastern Chinese province of Zhejiang was sentenced to death for swindling more than $867 million from investors in an illegal fund-raising scheme, a newspaper reported on Wednesday.
Ji Wenhua was sentenced to death on Monday by Lishui intermediate court in Zhejiang for illegally raising 5.5 billion yuan ($867 million) between 2003 and 2008, the South China Morning Post reported. He was also separately accused of fraud worth some 1.47 billion yuan ($231.6 million).
Zhejiang has recently been hit by a severe credit crunch.
Two of Ji's relatives were given suspended death sentences, while two employees from Ji's company, Yintai Real Estate Group, were jailed for three years, the paper reported, citing the Procuratorial Daily.
Zhejiang's capital, Wenzhou, has been hit by a debt crisis and a wave of high-profile corporate bankruptcies, with firms unable to repay loans from shady underground lenders at extortionate interest rates amid a nationwide credit squeeze.
"The severe punishment was meted out as the authorities step up a crackdown on pyramid schemes and underground banking," the Post reported.
The Ji family had begun raising funds from the public in 2003 despite losing money on their property development firm, the paper reported. They promised investors high interest returns from 15 to 25 percent that were ultimately unsustainable, Lishui court documents showed.
Some academics said regulatory oversight had been lax in the region, which has seen a spate of similar schemes.
"Only when such schemes become social problems for their fraudulent nature do the authorities begin to do something about them," Zhejiang University professor Li Youxing, an expert in private fundraising, told the paper. "But it often comes too late, and there's little they can do about it."
($1 = 6.346 Chinese Yuan)
(Reporting by James Pomfret; Editing by Paul Tait)