The Way the Credit Crumbles: Shanghai Wealth Manager Detained by Police

Zhongjin Investment Manager Chen Ming flaunters her "wealth"Reuters: Shanghai wealth management firm comes crashing to earth as executives arrested

Zhongjin Capital Management made a splash in the past couple of years in Shanghai. The wealth management firm’s imposing branch office on Shanghai’s historic Bund pulled in many eager investors seeking the double-digit returns it promised on short-term financing products. It had a big profile, sponsoring popular Shanghai TV dating program "Saturday Date" and signed up domestic billiards star Pan Xiaoting as a spokesperson.

But this week, the image of riches and success that it had cultivated came crashing down. Police said they arrested 21 executives linked to Zhongjin Capital on April 5 on suspicion of "illegal fundraising," a loosely defined term applied to irregular behavior in China's energetic but opaque shadow banking sector.

...Chen Jiajing, the 29-year-old chairwoman of Zhongjin's parent Guotai Investment Holdings, cannot be located. Public statements issued this week by two Hong Kong-listed companies in which Guotai is a major stakeholder indicated they had been unable to reach her.

..."The really strange part was that our business hit a new all-time high on April 5, but the next day the offices were closed," one employee who gave her name as Jiang said in a phone interview, adding that investors had been paid off on schedule the day prior to the arrests, but were unable to withdraw funds that were scheduled to mature on April 6.

"The victims are the small investors and the low-level employees. We all got our friends and family to invest in the company's products," she said.

Huanqiu: 揭秘中晋如何圈钱:租豪华办公楼拉明星站台

Publicly available data show that as of February 10 this year, investors "in the Zhongjin" marketing platform had total investment which exceeded 34 billion yuan, involving more than 130,000 total visitors, in order to calculate the per capita investment in each amounted to 260,000 yuan.

One of the employees of the firm flaunted her wealth on social media:

In the micro-channel circle of friends, Cheng Ming has long been on the "winner of life" - she has three cars, live in luxury, the Audi Q5 as a birthday gift for his father, he bought more than one million to hundreds of financial products ... ... not a "red network", not wealthy people, she's just a fund manager in Zhongjin assets. It is said that "Zhongjin" collapse began Cheng Ming "show off their wealth."

Last November 26, Cheng Ming made circle of friends, said to be the father birthday, dad to send a 120-square-meter house and Audi Q5. Two months later, she was in drying their circle of friends has three luxury sports car. March 1, she was drying out hands seventy-eight bundles of hundred notes of pictures commented that "all have not the strength."

In fact, Cheng Ming's flaunting of wealth on social media was a "business need." Li Lin (a pseudonym) has worked in Shanghai's financial sector for more than a decade, found that Cheng Ming creation of a luxurious lifestyle on social media was an illusion, her father's house clearly a sample room, and the vehicle is from a advertisement. Li Lin said, "She 'showed off her wealth', to let customers and partners see, invest with her and they can have the same success in life. Not only is the Cheng Ming, I was exposed to a lot of Jin the employees do this."

The firm registered 50 separate companies and had perhaps more than 100 subsidiaries:

Shanghai police released information indicating that, since July 2012, with Xu Qin as the actual control of "the Zhongjin network," the company has invested in Shanghai and other provinces registered 50 subsidiary companies, and controls more than 100 limited partnership, lease high-end commercial buildings and hiring a large number of sales through online advertising and offline promotion, etc., the use of false business, related party transactions, inflated performance and other means to obtain the trust of investors, and in the name of "the Jin partner plan", disguised We promise high annual yield, not specific to public wantonly illegally funding.

In addition to the official website show their "huge" distribution assets, "the Zhongjin clique" also rent Shanghai and many ancient buildings as the top office buildings and put up the words "in Jin 1824" signs; China announced strength of the company investment company registered more than 50, also controls more than 100 limited partnership; their spare time are on a yacht and sailing team will be spent. The company is also the title sponsor of Shanghai famous dating show "Meet Saturday" and "Nine days after the ball," Pan Xiaoting is their spokesperson.