Sold ants at a high price: condemned to death for fraud
Wang cheated over 36 thousand people out of 3 billion yuan, selling black ants at high prices. One of the investors committed suicide. The death penalty is not excessive for economic fraud.
Beijing (AsiaNews/Agenzie) –Wang Zhendong cheated people out of 400 million dollars selling ants at high prices. But the court sentenced him to death.
In July 2003 Wang founded Yingkou Donghua Trading Group, a company that thrived to partake in several activities. The investor paid 10 thousand yuan (1,300 dollars) for two boxes filled with black ants which they would raise. Then, someone from the company would come to collect the ants. Investors would receive 52 dollars 10 times a year for a total of 520 dollars, the equivalent of 40% of the investment.
In China, some types of black ants are steeped in tea or soaked in liquor as a natural remedy for ailments such as arthritis. Wang would say that they were “rare” and used for making medical elixirs and wine. In reality, they were worth nearly 200 yuan (25 dollars).
Investors would be paid regularly and the company’s name spread in the port town of Yingkou in north eastern Liaoning province. Wang, a native of the city, is married with three children. He was known as a wealthy man that would give large sums of cash to relatives and friends showing off his wealthy identity. The company was known for having at least 10 subsidiaries and 800 employees.
In reality, he did not pay the high commissions with the inexistent profits from the ant sales, but instead with the money from subsequent investors, like a chain letter. In the United States, that would be called a Ponzi scheme, after Charles Ponzi, a Boston scammer who briefly became a millionaire in 1920 by using such a fraud.
The profit was high: 10 times higher than the bank’s interest rate, which is nearly 4% per year. In a little over a year he attracted over 36,700 investors in 12 cities for a total of 3 billion yuan ( 390 million dollars). But in order for this game to continue new investors were always needed. At the beginning of 2005 the company ceased payments.
Angry investors surrounded the company's headquarters with signs that read: "We want to eat! Return our blood and sweat money." Many had invested their life savings, attracted by the fast rate of return. According to the Beijing News, at least one of the investors committed suicide.
In China, the death penalty is applied in cases where 60 crimes or more have been committed, including money fraud. In the country which is booming economically, the fight against economic fraud, false bankruptcy and corruption is a priority. The sentence for these crimes is death. In Wang’s hearing he defended himself by saying he just wanted to raise money to finance his other companies, but that he had made a few bad investments.
He promised that in time he would return the money. The police recuperated only 10 million yuan. The court ruled the crime as very grave because of the damage it caused thousands of people. Wang can appeal, but in the meantime, he has been detained.
15 of his collaborators were also found guilty and were given 5 to 10 years in jail. At Yingkou local sources tell the Washington Post that they have started to see advertisements similar to the ones Wang’s company used. The new company, Ant Power Magic, is promising 10% returns.