SHANGHAI • The alleged mastermind of a scam which cost Chinese investors hundreds of millions of dollars lived in a penthouse apartment that featured peacocks and fountains, reports said yesterday after he was paraded on television confessing to his crimes.
Xu Qin, described as the "controller" of Zhongjin Asset Management and its linked companies, was among 35 executives and employees formally arrested last week in connection with the scheme, state- run Dragon Television reported at the weekend.
Xu's firm owes more than half its 25,000 investors a total of 5.2 billion yuan (S$1.09 billion), said the broadcaster, which is based in Shanghai.
Xu, 35, was shown saying that the company "paid back previous investors' principal and interest with money from new investors".
"It is actually a typical Ponzi scheme," he admitted.
He squandered around 500 million yuan of investors' money on luxury houses and cars with his wife, the report alleged.
Part of the broadcast showed police scouring a building, remarking on piles of money, a Hermes handbag and other luxury goods.
Xu is the latest example of a suspect being shown on Chinese state television confessing to crimes, often before he or she has appeared in court. In this case, Xu has not been formally tried in court.
Overseas rights groups have condemned the practice, and say the interviews may be carried out under duress, with some senior Chinese lawyers also expressing concern.
Xu and his wife rented a 1,200 sq m penthouse apartment in one of China's most expensive developments, the Tomson Riviera in Shanghai, where he raised peacocks and built fountains in his living room, state-run newspaper Jiefang Daily reported yesterday.
Police in Shanghai could not be reached for comment on Xu's confession, but had previously said that he had registered more than 50 subsidiaries and controlled 100 linked companies.
Xu was detained with other executives at an airport in Shanghai last month as he attempted to fly to Italy on a chartered aircraft, according to previous reports.
Defaults and fraud cases in China's shadow banking sector have risen in the past few years as the economy slows and struggling companies have been forced to pay higher interest rates to raise cash as they try to stay afloat.
In a recent scandal, peer-to-peer lending firm Ezubao bilked 900,000 investors out of US$7.6 billion (S$10.4 billion) by offering high interest rates which it was unable to pay, in what one executive described in a televised confession as a "typical Ponzi scheme".
Meanwhile, police in Shanghai have set up a new securities crime unit, China's Wenhui Daily reported yesterday.
AGENCE FRANCE-PRESSE, REUTERS
