Fraudsters Get Life in Prison for $1 Billion Fake-SOE Fundraising Scam

Investors lost billions in a scam involving privately offered fund products that were advertised as backed by “state-owned” China Railway Supply Chain.

On Nov. 30, a court in Shanghai sentenced two senior executives of a self-described supply chain company to life in prison for their leading roles in a fundraising scam that peddled fund products worth more than $1 billion under the guise of a guarantee by a fake state-owned enterprise (SOE).

Investors ultimately lost billions of yuan of their investments in the products guaranteed by China Railway Supply Chain Group (中铁中基供应链集团有限公司). The Shanghai court fined the company 100 million yuan ($14.3 million) and ordered all assets owned by both executives, Meng Chen and Cen Peng, to be confiscated, according to an announcement by the court.