Hundreds stage protest in China's city of Shanghai, demanding action on alleged Ponzi scheme

SHANGHAI (AFP) - Hundreds of protesters gathered in Shanghai on Monday (Sept 12), demanding that the government investigate an investment company that has failed to pay them since last year.

Police tried to clear the crowd from in front of the Shanghai city hall, where around a dozen people handed out pamphlets accusing the Dada Group of making off with their money.

Police froze the group's accounts in December, when respected business magazine Caixin said 29,300 people had invested a total of 190 million yuan (S$38.7 million) in its online products. It also had several offline offerings.

China's consumer investment sector is poorly developed and regulated, and Ponzi schemes have become common in recent years as cash-rich investors, burnt by stocks and real estate, search for alternatives for their money.

At the Shanghai's prosecutors' office, where a second group of demonstrators gathered on Monday, Mr Shao Tiejun, 35, told AFP he had invested more than 200,000 yuan through Dada Group after the company promised him a 7 per cent return.

His suspicions were only aroused when the accounts were frozen.

"This money is basically my life savings. I'm 35 and I have kids and parents to support," he said, adding he now only hoped to get his principal back.

"Even if there is one thread of hope, I will keep fighting for it." He had travelled over eight hours by bus to attend the protests, he added.

According to Caixin, Shanghai's economic investigation unit detained Ma Shenke - the "actual controller" of Dada's parent company, Shanghai Shentong Group - in connection with an investigation.

In June, prosecutors said that police had brought charges against Ma and an additional 19 people for "illegally absorbing public deposits and fraud".

"I have waited nearly a year but the government hasn't been able to give us any update," Mr Shao said.

It is the latest instance of investors turning their anger on the Chinese authorities after their decisions went awry.

Last month, Chinese prosecutors announced they would seek charges against 26 people linked to an alleged US$7.6 billion Ponzi scheme connected with peer-to-peer lender Ezubao.

In June, police arrested 19 people connected to troubled metal exchange Fanya - which managed around 40 billion yuan in assets, amid suspicion of fraud.

And in May, 35 executives and employees of Shanghai-based Zhongjin Asset Management were jailed after it failed to make payments of 5.2 billion yuan to its 25,000 investors.