Wu Zhenghai, a multimillionaire businessman in Shangqiu, Henan province, who illegally used his position as deputy to the city's people's congress to raise 610 million yuan ($87 million), was detained on July 1, Henan Daily reported yesterday.
The city police department, procuratorate, court and justice bureau, in a rare collective action, jointly released on July 7 a document accusing Wu's company of illegally raising funds and telling investors to register at the local police station for compensation at a later date, the Zhengzhou-based newspaper said.
More than 7,400 people are involved in this case and 1,501 victims are registered with the police.
Twenty-six suspects including Wu and 5 other major suspects have been arrested.
The total amount of the illegal fund is at 610 million yuan, Liu Huisheng, the spokesman of the Shangqiu government told Henan Daily.
"I invested 40,000 yuan in the company, under the guarantee that I would gain 40 percent interest a year", a local farmer surnamed Zhang said.
Wu, 41, set up his Weilai Agriculture Corp, a company featuring "hi-tech" agriculture in 2004, while concurrently running businesses in the areas of entertainment, catering, and real estate.
The company later gained fame by planting dragon fruit and developing related products.
"Planting dragon fruit brings 30 times the profits earned from wheat", Wu once said, according to the Henan Daily.
Wu was awarded one of the 10 "moving Shangqiu" figurines in 2005 for his efforts in "developing modern agriculture", and his company was named the provincial leading enterprise in agricultural industrialization in 2007. All these laurels considerably boosted public confidence in the company.
The company, however, had begun exaggerating its productivity in 2005 in order to gull people into investing, an anonymous Weilai employee told Shanghai-based Daily Economic News.
"The actual total output at our planting base is lower than 300 kg. The company bought dragon fruit elsewhere and sold them as products cultivated on their own farms, claiming a 3,000 kg per mu (200 hectares) output," he said.
Wu himself traveled around the nation, using both his position as Shangqiu People's Congress deputy and "hi-tech" agricultural business to raise money. Weilai has 53 branches in 13 provincial regions to help him raise funds.
Wu, in his capacity of chairman of Weilai , was selected as a torchbearer and planned to attend the torch relay in Shangqiu next week. He is now disqualified.
Source: China Daily
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