Chinese Businessman Gets Death for Bogus Ant-Breeding Scheme

FoxNews / Associated Press report that a Chinese business man was sentenced to death for swindling $385 million from investors.
The scheme involved ants which are used in some traditional Chinese medicinal remedies, which can fetch a high price.
 
One observer quipped: "Mr. Zhendong would have been better off moving here and soliciting FDA approval for his ant-breeding kits."
 
Fifteen managers of the company were given prison terms ranging from five to 10 years and fined from $12,800 to $64,000.
 
AP notes: "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."
 
hm…..
 
The pharmaceutical industry's record of fraudulent marketing of drugs http://www.ahrp.org/cms/content/view/440/94/
hazardous drug that have had a pernicious impact on the public health. And the record includes a long list of civil and criminal cases brought by state attorneys general against pharmaceutical companies that defrauded Medicaid of large sums of money. http://www.ahrp.org/cms/content/view/413/29/ 
 
Given that record, China is probably not a good place for the pharmaceutical industry–unless companies are willing to market their products without engaging in fraud…
 

Contact: Vera Hassner Sharav
212-595-8974
veracare@ahrp.org <mailto:veracare@ahrp.org
 
 

http://www.foxnews.com/story/0,2933,252141,00.html
Chinese Businessman Gets Death for Bogus Ant-Breeding Scheme
Thursday, February 15, 2007

BEIJING  —  A Chinese business executive was sentenced to death for swindling $385 million from investors in a bogus ant-breeding scheme, a court official said Thursday.

Wang Zhendong, chairman of Yingkou Donghua Trading Group Co <javascript:siteSearch('Yingkou Donghua Trading Group Co');> ., had promised returns of up to 60 percent for buying kits of ants and breeding equipment from two companies he set up, the reports said.

Ants are used in some traditional Chinese medicinal remedies, which can fetch a high price. Wang sold the kits, which cost $25, for $1,300, the Xinmin Evening News <javascript:siteSearch('Xinmin Evening News');>  and other newspapers reported.

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

Prosecutors told the court in northeast 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, Xinhua News Agency <javascript:siteSearch('Xinhua News Agency');>  said.

The Intermediate People's Court in Yingkou on Tuesday sentenced Wang to death, said an official in the court's case office who gave only his surname, Yin.

Fifteen managers of the company were given prison terms ranging from five 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 scams, fearing 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.

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Posted by Vera Sharav | Saturday, February 17, 2007 | Categorized Fraud | Tagged Bookmark the permalink.