Friday, April 17, 2009

CHINESE WOMAN IN $57m FRAUD TRIAL

By Chris Hogg
BBC News, Shanghai

100 Yuan notes
Wu Ying is accused of defrauding investors of about $57m

A Chinese woman who turned her beauty business into a multi-million dollar property empire could be executed after being put on trial for financial fraud.

Wu Ying, 28, who comes from a family of poor farmers, has pleaded not guilty to charges that she ran a pyramid scheme.

She is accused of defrauding investors of $57m (£38m) by promising returns of up to 10% but failing to invest their money properly, state media reports.

Her story has attracted much attention in China since her arrest in 2007.

Wu Ying was born in the countryside south of Shanghai. She quit an accountancy course while still in her teens to manage a foot massage parlour and beauty salon.

She first attracted attention three years ago when she registered a company whose interests included hotels, department stores and dry cleaning chains.

The company was said to be worth $500m - a figure that would have made her the sixth richest woman in China at the time, but no-one knew where the money had come from.

Soon the authorities took notice and arrested her. Now they are accusing her of promising high returns to 148 investors, but actually using the money for herself, repaying loans, buying real estate and vehicles, and running her business.

The young entrepreneur denies that she was running a pyramid scheme.

She insists she borrowed money from 11 friends and did not know what they had told others who had lent to them.

She claims if she had not been arrested she would have made enough to pay everyone back what they were owed.

Rags-to-riches-to-jail stories like this are not that uncommon in China. The authorities are keen to show they are cracking down on white collar crime.

Several years of double digit economic growth saw many young entrepreneurs, military officials and party cadres breaking the rules in a rush to join the newly-rich elite.

If convicted Ms Wu could face the firing squad.

BBC NEWS REPORT.

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