FOUR executives from two companies stood trial Monday in a case that saw hundreds of people cheated out of more than 180 million yuan (US$28.57 million).

    The men were involved in a scheme that saw jade pieces traded like stock through an exchange. The jade was reportedly overvalued, or may never have even existed.

    The four former executives of China Cultural Properties Exchange and Shenzhen Zhongruilong Trust Assets Management Co. Ltd. are accused of helping the owner of the companies defraud 784 people out of 180 million yuan between August 2013 and January 2014.

    In the scam, China Cultural Properties Exchange asked Guangdong Geology Science Research Institute to issue authenticity certificates for jade artworks with experts from the Asia Jewelry Association overvaluing the jade pieces, prosecutors told Futian District People’s Court.

    The jade pieces were then securitized, or turned into investments that investors could buy partial ownership of, and sold through China Cultural Properties Exchange, a jade-piece securities exchange, similar to a stock market.

    The Zhongruilong company guaranteed the securities.

    Unknown to investors, both the exchange and Zhongruilong were controlled by Zheng Xudong, who fled with huge amounts of money before the exchange was shut down in early 2014.

    The jade may have never existed, as prosecutors did not say whether the jade-backed securities existed nor did they say what the pieces were actually worth.

    Investors discovered they could no longer trade the jade securities or withdraw money on Jan. 13, 2014.

    The former executive president of the exchange, surnamed Li, is accused of fraud. Li told the exchange’s IT chief to fabricate prices of jade-backed securities, giving investors the impression that prices were rising.

    Zhongruilong’s financial supervisor, surnamed Lu, and accountant, surnamed Zhu, are accused of illegally raising money by receiving funds from investors and transferring them to Zheng and Li.

    Zheng instructed another accused, surnamed Hu, to register the exchange in Hong Kong in July 2013 and appointed Hu as legal representative of the exchange without registering it with Shenzhen authorities.

    Hu is accused of illegally setting up a financial institution without government approval.

    Dozens of victims observed the trial Monday. One of the victims was expelled from the court after he shouted loudly when one of the accused tried to shift the blame to Zheng.

    While 784 victims reported being defrauded out of 180 million yuan through the jade scheme, the Southern Metropolis Daily said Zheng’s scam also involved three peer-to-peer online lending websites, which he also ran.

    The Daily said more than 3,000 victims lost 700 million yuan through Zheng’s various schemes.

    Zheng fled to a Southeastern Asian country before the Spring Festival in 2014.

    China has issued an international warrant for him.  

    (SD News)