China company accused of milking investors of $7.6 billion

By: 9 years ago

A man scratches his head as he checks the stock prices on an electronic board at a brokerage house in Beijing, Tuesday, Jan. 5, 2016. Last years Chinese stock boom and disastrous bust has left a legacy of public distrust of financial markets along with a bill the ruling party has yet to disclose for its rescue. The Shanghai index ended 2015 up 9.5 percent for the year, compared with a 0.7 percent loss for Wall Streets Standard & Poors 500 index. But many novices who bought just before the peak are left with shares worth less than they cost. (AP Photo/Andy Wong)

A man scratches his head as he checks the stock prices on an electronic board at a brokerage house in Beijing, Tuesday, Jan. 5, 2016. AP FILE

BEIJING, China — Chinese police arrested 21 employees at China’s largest online finance business on suspicion of fleecing 900,000 investors for $7.6 billion, in what could be the biggest financial fraud in Chinese history.

State media outlets reported the arrests late Sunday and state broadcaster CCTV aired purported confessions from two former employees at Ezubao, an Anhui Province outfit that rose from anonymity to become China’s largest online financing platform in the span of about 18 months.

Investigators found about 95 percent of the investments offered on Ezubao were fake.

Chinese authorities have struggled to regulate the sudden boom of online investment schemes that promise higher returns than those at traditional banks. The industry has attracted a flood of investment from China’s middle class.