China’s ‘Bernie Madoff’ jailed for life for huge fundraising fraud
Ding Ning was the head of Ezubao, a fraudulent online finance firm that duped investors out of more than US$7.7 billion, according to state media reports
The ringleader of China’s biggest Ponzi scheme was sentenced to life in prison by a Beijing court on Tuesday, state-run Xinhua news agency reported.
Ding Ning, dubbed by the media as China’s Bernie Madoff after the Wall Street con man, was convicted of fraudulent fundraising, smuggling precious metals, illegally possessing guns and crossing national borders, the report said.
Ding, 35, was the head of Ezubao, a peer-to-peer online financing firm. He fleeced more than 50 billion yuan (US$7.7 billion) from about 900,000 investors across the country with fabricated projects and returns from June 2014 to December 2015 when the scheme was busted by police, according to earlier state media reports.
Ezubao was the biggest Ponzi scheme ever broken up China in terms of the amount of money involved. The case exposed the financial and social risks which similar programmes posed as they mushroomed across the country amid lax regulation.
The amount of money involved in Ding’s Ponzi scheme was smaller than Madoff’s US$64.8 billion, but the Chinese scam had a far bigger client base of investors compared to the 4,800 clients in the US case.
The collapse of Ezubao was a wake-up call for Chinese financial regulators who scrambled to plug loopholes in regulations governing internet finance schemes, which had rapidly gained in popularity.
Xinhua quoted a Beijing No 1 Intermediate People’s Court ruling as saying two corporate vehicles controlled by Ding were fined 1.9 billion yuan. Ding was fined 100 million yuan and his personal assets of 500,000 yuan confiscated.
Ding’s younger brother, Ding Dian, was also sentenced to life imprisonment and fined 70 million yuan. Another 24 people involved in the scheme were given jail terms ranging from three to 15 years.
Most of the funds raised by Ding were wasted financing the scheme’s operations and supporting the extravagant lifestyles of its ringleaders, Xinhua said.
“The illegal fundraising activities by the 26 accused persons led by Ding Ning, Ding Dian and Zhang Min have involved a particularly large amount of funds, caused heavy financial losses of investors across the country and seriously distorted the state’s financial supervision system,” Xinhua quoted the ruling as saying.
One reason Ezubao spread so quickly within a short time was its massive advertising campaign.
Ding’s company spent at least 150 million yuan on television commercials, with its adverts broadcast on almost every TV channel across China, including on state-run CCTV.
China’s government has become much more aggressive in regulating fundraising schemes since the collapse of Ezubao.
China’s Ministry of Public Security said in July it would strike hard against shady financial schemes due to the risk of social unrest.
A day after the warning was issued, thousands of members of Shanxinhui, a fundraising scheme declared illegal by the authorities, organised a rare protest in Beijing.