Swindle With Ants Gets Chinese Tycoon a Death Sentence

New York Times, February 16, 2007

By THE ASSOCIATED PRESS
BEIJING, Feb. 15 (AP) — A Chinese business executive was sentenced to death for swindling $385 million from investors in a fake ant-breeding scheme, a court official said Thursday.

The executive, Wang Zhendong, chairman of the Yingkou Donghua Trading Group Company, had promised returns of up to 60 percent for buying kits of ants and breeding equipment from two companies he set up, news media reported.

Ants are used in some traditional Chinese medicinal remedies, which can fetch a high price. Mr. Wang sold the kits, which cost $25, for $1,300, the Xinmin Evening News and other newspapers reported.

Mr. Wang promoted his products through advertising and drew in more than 10,000 investors from 2002 to June 2005, when investigators shut down his companies, the Web site of the People’s Daily reported.

Prosecutors told the Intermediate People’s Court in Yingkou, in northeastern China, that one investor committed suicide after realizing he had been duped, and only $1.28 million of the swindled money had been recovered by the time the case was filed with the court last June, the official Xinhua News Agency said.

On Tuesday, the court sentenced Mr. Wang to death, said an official in the case who gave only his surname, Yin.

Fifteen managers of the company were given prison terms ranging from 5 to 10 years and fined from $12,800 to $64,000, Xinhua said.

Fake investments and pyramid investment schemes have become common during China’s transition from a planned economy to a free market. Chinese leaders have tried to eradicate the swindles, fearing that widespread losses could add to already percolating social unrest.

The death penalty is used broadly in China. Though usually reserved for violent crimes, it is also applied for nonviolent offenses that involve large sums of money or are deemed to have a pernicious social impact.

That kind of scums come up from time to time with a different face, sometimes it was the mushrooms, sometimes it was the London Gold, the aim and the mechanism is the same, cheat simple minded people to give them the money, use the money received from the people who joined later to pay off the earlier "investors", make an impression that the scheme do earn big money, when the snowball is big enough, the people who run the scheme disappeared with all the money.