That helped them falsely claim tens of millions of yuan in tax deductions from Beijing, the website of the People's Daily reported yesterday.

Prosecutors also found a trading firm, controlled by Lin (pictured), that had bought more than 100 fabricated tariff certificates and had used them to claim about 100 million yuan (HK$123 million) in tax rebates, the report said.

Lin, whose business empire spans mining, food production and trading, was hailed this year as a role model by the local government after he claimed to have bought the fictitious '85-year-old Atlantic Bank of America in Delaware' for US$60 million. Wenzhou city even made him a member of its Chinese People's Political Consultative Conference.

But state media soon uncovered the hoax.

Lin fled the city in May, but police caught him on June 10, the report said. Five other suspects were also formally arrested on Wednesday. They include a senior manager of Lin's firms, his finance manager, two account clerks and a middleman.

The report said Lin charged firms that bought the fake invoices a levy of 4 to 6 per cent of the invoices' par value. Investigators estimated the government lost tens of millions of yuan in tax revenue as a result.

The case may just be the tip of the iceberg, with prosecutors still investigating many other leads.

Lin reportedly told investigators that he had trouble meeting interest payments on loans from banks and underground lenders last year, and started selling fake invoices to make quick money.

Before the sham was uncovered, the fictitious bank deal was seen by Wenzhou's government as a boost to the city's image as the mainland's top private business hub.

Following Xinhua's expose in March, Lin's 71-day membership in the city's CPPCC also came to an end.

Lin reportedly could face life imprisonment and a fine of up to 500,000 yuan.