Trust Fraud

China’s Ongoing Battle with Illegal Fundraising
For example, we have seen a flagging coal company’s owner throw a large wedding celebration for his daughter while defaulting on his trust loans. Xing Libin, founder of Liansheng Resources, borrowed a total of 1 billion RMB ($165 million) from Jilin Trust and spent $11 million on a celebration on Hainan Island. Xing later applied for debt restructuring at a local court, and Jilin Trust warned investors that Liansheng faces problems with repayment of its debt. Xing faced no legal repercussions as a result of his behavior. By contrast, in a very public case, Wu Ying, or “Rich Sister,” was indicted for taking $55.7 million from investors on behalf of her company, Bense Group. She had spent some of the money on cosmetics, clothing and luxury cars.

The general rule of thumb in these cases may be that the less formal the type of fundraising carried out within the shadow banking sector, the more at risk it is of being pursued as an illegal fundraising case.

In the case of Jilin Trust, the company is in court over ¥150 million loan to a Shandong businessmen.

The man in question, Dai Yingzhong, was looking for credit. Evergrowing Bank investigated the firm and denied the firm credit, deeming the company too great of a credit risk.

One of his high interest lenders, in order to obtain return of his capital, introduced Dai to a middleman who could help Dai obtain credit. This middle man introduced another and another and another until they reached Xu Bo. This middleman, Xu Bo, dealt with the trust companies and eventually arranged for a loan from Jilin Trust, having contact with an employee at that firm in Shanghai. Xu Bo sent financial statements to the Shanghai office. Later, an inspection team from Shanghai came and reported that the machines were operating in the company's mines, but there were hardly any workers. They delivered their report to their department. The loans were approved. Dai eventually paid the middle men more than ¥37 million yuan in fees for the help. The rest of the money was spent in various ways, some money given to his lover, accountant, etc., plus company debts.

吉林信托遭骗贷1.5亿之谜 (Jilin Trust ¥150 Million Fraud Mystery)
Along with passionate music, as well as "minimum risk, maximum efficiency, the highest return" prompt, entered the Jilin Province Trust Co., Ltd. (hereinafter referred to as "Jilin Trust") is the official website.

Together with the people involved, allegedly defrauding Jilin Trust 150 million yuan loan cases, reveals the company from lending cheated to cashing the whole process, also revealed in 2012 by the media widely suspected of Jilin Trust "Songhua River No. 78 Nanshan Building Materials Project "to honor the truth of the case, leaving the above Jilin Trust declared" three best "was a great question.

A Shandong businessman, carrying huge debt, the way to Shanghai and got relationships from in Changchun, Jilin Trust loan financing 150 million yuan, and ultimately only a few loans for Laiwu Nanshan limestone building materials group project development, and the rest almost exclusively for Repayment of debts and expenses before middle.

Jilin Trust In this context, it announced before the loan recovery, all cashed principal client, and the client to achieve the expected rate of return, and the way it is used its own funds to repay. Jilin trusts told the "First Financial Daily" reporters, said that with its own funds to cover the risk of these projects, the purpose is to ensure that investors' interests.

These businessmen suspected loan fraud case in May 12 to 14 in Changchun City Intermediate Court hearing.

There are machines in action, few workers

Shandong Laiwu City, businessman Daiying Zhong Nanshan operates limestone Building Materials Group Co., Ltd. (hereinafter referred to as "Nanshan building"), also has a limestone mine.

Informed sources said that the Nanshan building debt, unsustainable, and the personal and corporate representatives Dai Yingzhong saddled with tens of millions out of debt.

For Daiying Zhong, the businesses and individuals in the dual pressure, then a loan shark, has lost credibility, he has only one way: loans to financial institutions.

He has found the bank and the Evergrowing Bank, Weihai, Jinan Branch.

One day in the spring of 2011, Evergrowing Bank Jinan Branch of the staff to visit the Nanshan building. When the staff member went halfway, they make judgments based on their own experience: the company in environmental protection, economic development and do not meet the loan conditions, then going to evacuate.

Shandong Informed sources told reporters in 戴英忠 commissioned middleman plea, Evergrowing Bank's staff move on, and see the scene more determined not to loan their ideas. Because apart from a few mines on the shabby little house, even the staff are very small.

Eventually this fell through, Evergrowing Bank staff did not even report to the leadership.

戴英忠 in the trial, said the project is a major environmental kiln move around because of his loan. In the case of bank loans nowhere, a creditor Chen defense 戴英忠 high interest loans in order to recover their borrowing and interest to its introduction of a middleman week light.

Trial, the defense said Chen, weeks after introduction to light that he would no longer participate in other loan process. Week of light in the trial, said he was can help with loans and financing unit was originally said to be an investment company in Shanghai, China Trust later said, but in the end I do not know how to become Jilin Trust.

After weeks of light to 戴英忠 also introduced a man named Gao Peng, Gao Peng introduces a welcome people who called in, greet and introduce people in a Jiaoxu waves. 杨元武 final presentation Xu Bo Jilin Trust contacted the person in charge of one of Shanghai Trust.

According to the defendant in the trial introduction in welcome, while Jilin Trust also commissioned various related financing needs around the search unit. Funding and demand side coincide, so the $ 150 million financing opera curtain slowly opened.

Eventually, Jilin trust arrangement a specific person internship still deal with the matter. Under the arrangement, he found one middleman 戴英忠 Xu Bo's.

As requested, Xu Bo way by courier to Shanghai Nanshan building providing financial statements, audit reports, business license, asset evaluation reports and other business-related information.

September 2011, and part of the middleman 戴英忠 welcomed visits from the Shanghai area.

Inspection staff went 戴英忠 mines, they see the situation is that there are mines on the machine moving, but few workers.

After this visit, Jilin Trust person holding the information, the situation will be reversed Jilin Trust headquarters.

In addition to corporate data, the staff still internship under the above arrangement also wrote a "due diligence report." Jilin Trust according to the procedures, the project will be submitted to the Council and the investment risk control review meeting.

Not encountered major problems, the project successfully passed.

In November, in a Laiwu Laiwu hotel rooms, 戴英忠 Nanshan building materials and mining equity as collateral, the two sides signed a number of contracts.

November 7, Jilin Trust for social investors released Yoshinobu · Songhua River [78] No. Nanshan building project usufruct Capital Trust scheme, intended to raise funds 150,000,000 yuan, to invest in Nanshan building projects. In the description of the expected benefits of Jilin Trust said: "100 yuan to 3 million yuan principal income annualized 10.5%; 3 million yuan (inclusive) ~ 5 million yuan principal income annualized 11.5%; 5 million yuan (more) principal income annualized 11.8%. "

Jilin Trust in credit enhancement mode, said its 100% stake in Nanshan building and mining rights held by the Trust pledged to Jilin, as a guarantee of its usufruct expires repurchase program, in addition to Dai Yingzhong provide unlimited joint and several liability guarantee.

December 20, 2011, 1.5 billion loan was hit on the building account Nanshan Bridge Road, Jinan Qilu Bank branch.

Loans layers of distribution and exhausted

December 20, 2011, 1.5 billion loan arrival date. Dai Yingzhong not been carried away by the joy of being sealed in order to prevent this payment to other creditors, the day he put 140 million yuan hit on another company's account. Another 10 million ~ 12 million yuan hit back immediately Jilin Trust.

Trial, Dai Yingzhong confessed that fight back Jilin Trust funds in the name of a "comprehensive benefits trust funds." According to his statement in court, in accordance with the requirements of Jilin Trust him to use 150 million yuan of funds in a year and a half CCP need to pay more than 5,000 yuan in interest or other fees. "Interest of $ 140,000 a day, a lot of pressure." Daiying Zhong said.

The second allocation of objects, Daiying Zhong says, is to pay debts that the company should pay a total of 51.76 million yuan.

The third object is allocated to repay the original high-interest loans, alone, Dai Yingzhong will spend nearly 30 million yuan.

So far, 1.5 billion loan there are more than 5,000 yuan.

But the fourth assignment objects also have to pay is above a series of middlemen. Dai Yingzhong accountable to the commission 9 million yuan in Ying, Gao six million yuan, Zhou light and six million yuan, Xu Bo, who more than 1,000 yuan, paid a total of 37.52 million yuan to 戴英忠 middleman.

House seemingly endless rain, when 戴英忠 on third-party companies only less than 20 million yuan of funds, his old creditors Chen Youyi borrower disputes the grounds of defense by Laiwu City Intermediate People's Court to be seized. After court mediation process, Chen and from seizure of money in defense took 12.28 million yuan.

After Dai Yingzhong also confessed, gave his lover and accounting, who nearly 200 million. The company also paid the soil and water conservation fees, annual fees, security fees of more than 100 million.

At this point only the loans of more than 500 million. No production of 150 million yuan for the project, then only 1/30.

For the above loan allocation, Jilin Trust acknowledged receipt Daiying Zhong 12 million yuan of "comprehensive benefits trust funds," but denied that employees kickbacks in Nanshan project.

So, whether these capital flows are mastered it Jilin Trust? Indeed, Jilin Trust reported to the police novelty.

Multiple copies of the material obtained by this reporter revealed that interns or above the staff, more than a month after the loan, ie January 31, 2012, came ready to re-mortgage Laiwu mining Nanshan building warrants. Because this document will be the next day, that expire Feb. 1.

Dai Yingzhong evasive on the matter in every possible way, these internships staff had no option but to Laiwu City Land Bureau own window counseling. The investigation, mining warrants were exercised on January 16 and 20, were seized Laiwu local court twice.

Subsequently, the person in charge of the party arrived in Shandong, Jilin Trust. Further investigation, Nanshan building asset appraisal report turned out to be false, the financial statements and the audit report also forged.

Jilin Trust hurried report.

After the report, the judiciary set up a task force. Relevant data show that as of May 2012, the judiciary was recovered Jilin Trust totaling 42.24 million yuan in cash, the freezing of assets 89.08 million yuan, a total of more than 1.31 billion.

Unexpected honor

Jilin trust and building materials in accordance with the agreement, Nanshan, 150 million yuan loan purposes are: New quarries, lime green building, save for railway ballast and so on. The project is expected to yield annual principal at 10.5% to 11.8%, the estimated gain of about 16.5 million yuan; trust rate of return of 4.92%, expected revenue 7.38 million yuan.

But according to the above calculation, not to mention a variety of benefits, Dai Yingzhong companies are not even on the principal. After Dai Yingzhong incident, which account balance is only 5.4 million yuan the company around.

But a strange thing happened.

March 7, 2012, Jilin Trust released "Yoshinobu · Songhua River [78] No. Nanshan building project usufruct Capital Trust scheme liquidation report," according to the report said, "Trust Law", "Article 53" the relevant provisions early termination Yoshinobu · Songhua [78] No. Nanshan building projects. The Trust plans to achieve trust income 4,791,944.46 yuan. Accordance with the "trust contract" agreement, income distribution in favor of 4,639,444.46 yuan, pay the custodian bank custodial 152,500.00 yuan. Jilin Trust has been principal of the trust and the beneficiary from income paid to the beneficiary designated account.

Even more strange is that Jilin trust to the authorities issued a "building project Nanshan bank custodial fees, fees paid to third parties for payment of form" content display, bank custodial fees 175,500 yuan; third-party issue costs paid 4,144,200 yuan. These two charges, "pay table" clearly that is paid by the borrower, Nanshan building materials companies.

May 10, 2013, Jilin trust to the authorities issued a "note", as of May 10, 2012, surviving a third-party issue costs 414 million yuan.

Already on March 7, 2012 through the liquidation of the project, there is also the issue of the cost of the third party in a few months, and the issuing company is widely distributed in Beijing, Shenyang, Dalian, Jinan, Shanghai, Hangzhou, Suzhou, Shenzhen, Changchun, Xingtai even Tibet, it is incredible.

Jilin Trust in 2012 in the report to the competent leadership of Jilin matter said Nanshan financial center building project commissioned Beijing issued a total investment of 75 principals, 74 is a natural person.

Jilin, Jilin Province Trust is the only specialized non-bank financial institutions engaged in financial trust business, the company registered capital of 1.597 billion yuan, 32 billion yuan of trust assets under management.

Recently, Jilin Trust Annual Report 2013 released, as of the reporting period, the total assets of the Trust Jilin 4.206 billion yuan, 822 million yuan decrease compared to the beginning than the 5.028 billion yuan, a decrease of 16.35%, total liabilities of 813 million yuan.

May this year will mark the peak of maturity trust products. According to the agency estimates that in the third quarter, there will be 1 trillion yuan of trust products expire. The media is expected after May, breach of trust will be entering the high incidence of high probability event.

According to media reports, on April 28, dozens purchased Trust · Songhua River in Jilin (No. 77) investor products "contain" China Construction Bank Head Office "discussion to say." The Shanxi branch of China Construction Bank managed trust fund dealers and products, as financiers Shanxi Liansheng Energy Limited mired huge debt crisis, the restructuring plan dystocia, resulting in default. Liansheng incident involving 70 million yuan once the rich Shanxi Xing Libin married woman and had sacked the head of China Resources Group, Song Lin, currently still confusing.

No. 77, 78 in the Songhua River in Jilin Trust two projects are treacherous. Information submitted in Jilin Trust showed that 78 projects Nanshan project for its own funds to advance. The 77 projects that 1 billion yuan scale of trust products has been unable to honor past few months, and now trust companies and banks have no intention of using the agency's own funds "disk access."

Informed sources said the reporter, the Songhua River (No. 77) products, Jilin Trust trust products only 10 million in the project, more than 300 billion platters, can not only their own to take a stand payment of funds to investors.

But whether or not access disk, its lending arbitrariness in the Songhua River, 78 trust products can be seen. The disk access with its own funds, state financial consequential damages;? Do not take disk, and when the interests of investors how to protect the

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