Never a good sign.
Police have arrested 21 suspects linked to Ezubo and its parent, Yucheng International Holdings Group Ltd., on charges including illegally soliciting funds from the public and fraud, the Xinhua report said, adding that prosecutors are seeking restitution for 900,000 investors.
As it happens, it appears Ezubo was less an online lending platform and more a $7.6 billion Ponzi scheme. And Chinese Ponzi schemes look exactly like Ponzi schemes everywhere else in the world.
The report, which cited Beijing police, said Ezubo and Yucheng had lured investors with promises of high-interest payouts from leasing projects. It quoted company officials saying 95% of the advertised investment projects were falsified, and calling Ezubo “a downright Ponzi scheme….”
Prosecutors said that Ezubo didn’t invest the money it collected, but rather used it to pay down earlier debt—and to fund lavish lifestyles for Yucheng’s Mr. Ding and several female executives. Mr. Ding allegedly gave one favored colleague a 130 million yuan ($19.7 million) villa in Singapore, a pink diamond worth 12 million yuan, luxury cars and 550 million yuan in cash.