Two China bank executives have appealed their sentences for defrauding up to 147 customers for 2.746 billion yuan ($412 million).
In one of China's highest profile bank frauds Zhang Ying, former president of the Hangtianqiao sub-branch of China Minsheng Bank, was sentenced to life imprisonment for defrauding up to 147 customers for $412 million.
All of Zhang's assets have been confiscated, while accomplice Xiao Ye, a former deputy president of the same branch, was sentenced to nine years, according to two rulings reported Monday.
Zhang was convicted at a Beijing court in December, judicial information said. Zhang and Xiao have appealed.
A final ruling made by the Beijing Higher People's Court late November upheld the original convictions and sentences against Zhang. Xiao's sentence for taking clients' money was originally 10 years.
The fraud was exposed in April 2017 when the head of the Beijing branch of China Minsheng Bank reported to police a wealth management product claiming to be customized by Minsheng Bank didn't exist.
Zhang, the representative selling these products, was detained by police for "personal moral deficiencies." She confessed that from 2011 to 2016, in order to "improve performance," she attracted customers with higher-than-normal deposit rates.
Zhang said, initially, she used her own money to pay returns. But by June 2012, she could no longer afford to do so. To keep her scheme going she falsified a bridge loan to satisfy her clients' high-rate interest demands.
Zhang used fake wealth management products called "structured deposits," with an annualized rate of return of between 15% and 40%, to trick some customers. These transactions were diverted to Minsheng bank accounts held by individuals and also to Zhang's friends and relatives.
The scam involved more than 10 branch employees.
"Born in the 1980s and short-haired, Zhang made an impression of being capable and professional in what she does," an investor told 21st Century Business Herald.
One client who invested several million yuan told Beijing Youth Daily in 2017 that "if it had not been reported by the media, I would not believe that the wealth management products I bought at the Hangtianqiao branch were fake."
The victim said the whole process of buying products was the same for other products. He never doubted it was authentic.
As a Renmin University graduate, Zhang became the head of the branch when she was 31 and was regarded as a "star banker."
According to forensic accounting, Zhang spent nearly 200 million yuan to purchase high-end residential properties - including an expensive courtyard in Beijing and a villa in Sanya. Also, 800 million yuan was spent on jewelry.
Between May 2017 and April 2019, China Minsheng Bank paid more than 2.171 billion on behalf of the 144 victims involved. It has paid partial losses to one victim while two remain unreimbursed.
The Beijing branch of China Minsheng Bank was ordered to make corrections and fined 27.5 million yuan.
The Beijing Banking Regulatory Bureau said bank staff committed serious violations of internal control management.
China Banking Regulatory Commission rolled out a regulation in August 2017, demanding banks in China record audio and video during the selling of wealth management products to clients.
The policy was said to be a critical measure to stem misleading or fraudulent financial products.
