A man in northwest China's Qinghai province is facing charges for his part in an illegal fundraising scam in which 36 million yuan (5.8 million U.S. dollars) was collected.
The man, surnamed Liu, is the representative of Dajintai Finance and Investment Management Co., Ltd. He is suspected of having illegally raised funds from 142 people by promising high profits between 2013 and 2014, according to the Chengdong District People's Procuratorate in Xining City, Qinghai's capital.
The money was then used to support the development of Liu's two other companies until a capital chain ruptured, the procuratorate said.
Further investigation continues.
Rapid economic growth, vast wealth with few investment channels and insatiable greed have driven new cases of illegal fundraising, a term used to describe taking deposits from the public without a license.
Last year, a private school in northwest China was found to have illegally raised 360 million yuan from more than 4,000 people between 2009 and 2011, ostensibly to fund college programs.
China has taken a harsh stance toward illegal fundraising by mapping out regulations and strengthening supervision on financial markets since the 1990s.
