THE owner of three local companies went on trial at Shenzhen Intermediate People’s Court on charges of contract fraud and illegal fundraising involving more than 1 billion yuan (US$143.79 million).

    Representatives of the three companies — a financing guarantee company, a share-holding company and a financial group — were charged with the same crime.

    According to the prosecutors, the businessman, identified as Liu, conspired with three other suspects to illegally raise 1.06 billion yuan by promising monthly interest rates between 1.8 and 5 percent to investors between April 2011 and June 2015 through his financial group and holding company.

    The payment was guaranteed by Liu’s financial guarantee company, which they claimed had been established on the base of Shenzhen Electronic Transaction Center. The company was unable to refund 504 million yuan to investors after its capital flow broke down.

    Around Spring Festival in 2013, Liu lied to a potential investor, surnamed Ma, saying his holding company had obtained the right to develop a property project and offering forged documents to the investor, who was a manager with a local company.

    Ma signed a contract in May 2013, which allowed Liu to change the use of 10 million yuan that he had invested into Liu’s companies as a deposit for the procurement of the property project. The 10-million-yuan fund was then misused by Liu and the other suspects.

    Between May 2014 and April 2015, Liu attracted investment with some of his financial products through an online P2P platform by offering annual interest rate of 18 percent. Liu cheated people out of 38 million yuan and was unable to pay back 11 million yuan to investors.

    Liu was caught in September 2015 at the Shenzhen airport.

    Liu and the three companies’ representatives denied the charges. Liu denied that he actually controlled the three companies. He claimed the financing guarantee company was actually in partnership with the other two companies. He denied having served in the two companies or used money that had been raised through the two companies. He claimed he never said the financing company was backed by Shenzhen Electronic Transaction Center and his financing company never offered monthly interest rates higher than 2.5 percent. Liu even claimed that he wasn’t aware of the 10 million yuan scam involving Ma.

    The representatives from three companies objected to the accusations, which they said weren’t clear and mixed the three companies together. They argued the three companies were independently operated.

    (Han Ximin)