Gold speculation scams on the rise
Updated: 2013-03-04 10:17
By Wang Zhenghua in Shanghai (China Daily)
Cheating investors under the guise of gold speculation on international markets is an emerging form of fraud, a local court said.
Since the end of 2012, the court of Shanghai's Jing'an district has tried several criminals who got investors to speculate in valuable metals in false accounts or take part in illegal overseas gold or foreign exchange trading. The investors ended up being cheated.
Wealth management professionals said victims were attracted to illegitimate service providers by the principal they required - as little as 5 percent of what legitimate wealth management institutions demand.
The criminals exploited the investors' ignorance of gold investment to make off with the principal.
"Only nine major banks in China are allowed to provide services in valuable metals investment, and investors should select these legal channels, where the safety of their cash deposit can be ensured," said Yang Fei, an analyst at Seewonder Financial in Shanghai, which provides financial derivatives services.
Because of the long bear run on China's stock market, many investors turned to the gold market, where criminals can prey on the unwary.
One criminal tried in the Jing'an court is Wang Ximing, 32, a veteran in financial investments in Shanghai.
After gaining a fortune during the investment frenzy of 2006 - through which the stock market gained 130 percent by the middle of 2007 - Wang quit his job.
But he soon squandered the money, and in October 2009, he found an ID card and used that man's identity to rent an office in a mansion in Shanghai and promote gold trade on international markets. Wang registered his company's name via the Internet in Hong Kong.
To avoid police inspection, he bought an idle deposit bank card online to receive money from the victims of his scheme. During this period, Wang married a woman named Jiang, and the two operated the illegal business together.
Through deceit, they coaxed a middle-aged woman, identified as Xu, into transferring 200,000 yuan ($32,000) to the bank account Wang controlled.