Officials Sued over Fundraising Promotion
   2012-02-29 12:46:30    Shanghai Daily      Web Editor: Guo

Nearly 150 people who lent money to a Wenzhou-based firm in east China's Zhejiang Province are suing the local government and police, asking for compensation of more than 68.64 million yuan (US$10.9 million) for aiding illegal fundraising.

The Taishun County government and police security bureau are accused of promoting the Liren Education Group's fundraising activities despite knowing the company was hugely in debt.

More than 7,000 individuals lent 4.5 billion yuan to the company between 1998 and 2011, China Business News reported yesterday.

According to the lawsuit filed by 147 creditors at Wenzhou Intermediate People's Court, some government officials, who had also lent money, allowed the then nearly-bankrupt company to collect more than 900 million yuan by making false promises of high returns to ensure they got their money back.

The company's boss, Dong Shunsheng, who was detained on February 3, is said to have promised annual interest of up to 60 percent to draw more money to pay earlier investors rather than apply for bankruptcy, the report said.

"He had no choice. If he had applied for bankruptcy, he would have been banned to offer priority to some key people and failed to pay their debts," an unnamed law expert was quoted as saying.

Xinhua news agency said that many of Liren's creditors were civil servants.

According to the lawsuit, this explained why the local government turned a blind eye to Liren's fundraising activities. It also alleged that, faced with Liren's alarming debt, top officials went on local television to encourage people to help the group.

More than 80 percent of the households in Taishun County became entangled in the fundraising fraud while other victims came from the neighboring Jiangsu and Fujian provinces and north China's Inner Mongolia Autonomous Region.

Dong was highly regarded in Taishun, where he made major contributions to local education. He started his business in 1998 and later developed it into a chain that had schools from kindergartens to high schools, all under the name "Yu Cai" which in Chinese means "to bring up talent," Xinhua said.

He established the Liren Group in 2003 and expanded into mining and real estate.

Share

               


CRIENGLISH.com claims the copyright of all material and information produced originally by our staff. No person, organization and/or company shall reproduce, disseminate or broadcast the content in any manner whatsoever without the express written permission of CRIENGLISH.com.

CRIENGLISH.com holds neither liability nor responsibility for materials attributed to any other source. Such information is provided as reportage and dissemination of information but does not necessarily reflect the opinion of or endorsement by CRI.

 
Listen
 
 

 
 
Highlights
Media Scan
Seven Sentenced to Death for Drug Smuggling
A court in Shandong has sentenced seven people to death for drug smuggling; three others have been given death with a 2-year reprieve.
Survey Shows Excessive Intake of Aluminum
Residents of northern China and those under the age of 14 may be ingesting more aluminum than healthy.
CHINATALKS
Video
• C4: Bad Boys
Join us for the latest episode of CRI's hilarious comedy news show.
• C4: World Cup Fever
Join us for the latest episode of CRI's hilarious comedy news show.
In Depth

News
China
World
Politics
Business
Sports
Showbiz
Sci-tech
Photo
Recommended
China
World
Sports
Showbiz
Travel
Video
C4
The Sound Stage
Showbiz
Travel
China Revealed
My Chinese Life
Travel
Destinations
Photo Gallery
Recommended
Learn Chinese
"In" Chinese
Chatting in Chinese
Pop Culture
Traditional Culture
Living Chinese
Chinese Studio
Chinese Class
Learn English
Special English
Pop Chart
Everyday English
Fabulous Snaps
CRI News
China.org.cn  | Xinhua  | People's Daily Online   |  CNTV.cn  | China Daily  |  Global Times  | China Job  |  China Tibet Online  | Taiwan.cn  | eBeijing  | Beijing Today  | China-Eurasia Expo  | APEC Yiwu Conference  | Chinese Embassy in S.Africa  | Chinese Embassy in Australia  | Chinese Embassy in NZ