International Law

China?s Response to Ponzi Schemes

By Stan

Bernie Madoff is lucky to be an American:

China executed two business people for defrauding hundreds of investors out of more than $127 million, calling the scam a serious blow to social stability, state media said Thursday.

Though usually reserved for violent crimes, death sentences are also applied for nonviolent offenses that involve large sums of money or are seen to threaten social order.

The two were executed Wednesday.

China’s highest court said the fraud had “seriously damaged the country’s financial regulatory order and social stability,” the official Xinhua News Agency said.

The report said Du Yimin, a beauty parlor owner from eastern Zhejiang province, collected more than 700 million yuan ($102.5 million) from hundreds of investors by promising them monthly returns of up to 10 percent from investments in beauty parlors, real estate and mining businesses owned by her company. She spent most of the money on houses, cars and luxury items, Xinhua said.

The second defendant, Si Chaxian, collected 167 million yuan ($24 million) from 300 people by saying they could receive interest of up to 108 percent. (AP)

I’m personally not in favor of the death penalty by any government in any country. Too much room for error. Death penalty notwithstanding, however, I think tough penalties for these types of white collar criminals is not bad at all.

In the U.S., Madoff’s case was an outlier. A lot of these folks get a couple of years in a federal facility and then somehow find ways to make money again (e.g. Michael Milken). Ridiculous.

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Full post as published by China Hearsay on August 06, 2009 (boomark / email).