Multi-billion dollar criminal loan scheme kills 89 in China (CCTV)
A gang of loan sharks in China killed 89 people after the criminal network hired debt collection companies to harass and intimidate borrowers who had no possible way of fulfilling their obligations, according to the Chinese state-owned CCTV broadcaster.
The gang, led by a man named Wang Tao and based in Lanzhou City, northwestern Gansu Province, signed 3.36 million contracts with 475,000 people between March 2018 and March 2019.
The loan sharks distributed 6.27 billion yuan ($ 960 million) in illegal loans. After interest, Wang’s gang had been repaid 9.11 billion yuan ($ 1.4 billion) and had outstanding debt of 9.84 billion ($ 1.5 billion), according to the accounting records presented. at trials.
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The gang implemented aggressive collection tactics coupled with vicious interest rate schemes, which are believed to have contributed to the suicide of 89 people in China.
Wang’s illegal business lured unsuspecting borrowers with tempting terms such as “no interest for seven days” or “low-threshold quick loans” in contracts that often resulted in annual interest rates of between 1,303%. and 5,214% if the borrower could not repay their debt quickly. According to Experian, a credit rating agency, the average interest rate for an above-the-edge personal loan is 9.4%.
The criminal network, which did not have a loan license, would also issue what police call “trick loans,” which did not include default conditions, which sometimes required borrowers to sell their properties for the sake of it. pay off their debts.
The documentary said, “The fundamentals of lending, also known as a trick loan, are that you can’t pay it back at all even if you go bankrupt. Under the guise of a legal loan, any loan is a bloodstained debt.
The fraudulent company hired 24 debt collection companies who harassed, threatened and hinted at victims and their family members for a commission. Authorities say the intimidation directly resulted in the deaths of some victims.
A victim in Sichuan Province who could not pay her debts committed suicide along with her husband. Another woman from Qinghai suffered the same fate.
The CCTV documentary showed footage of a man who, in his last music video, said he wanted to “die to relieve himself” of the burden his debts had created.
The scheme caught the authorities’ attention in December 2018 and in March 2019, 253 people were arrested in a hack in the three provinces of Gansu, Shaanxi and Anhui.
Wang was sentenced to life in prison while his senior lieutenants were given terms ranging from five to 20 years in a series of trials that ended in September 2020.
The official indictment against Wang has not been released, but other cases related to the scheme paint a clear picture of how Wang built his empire.
The apps and websites would attract people to the platform where the victim would enter their personal information as well as their phone contacts or phone call records.
Wang’s crew often targeted the same people with businesses that looked different but were all part of his criminal spider web. One person was borrowing from one of Wang’s “companies” to pay off another’s debt.
Loans often included a 30% “service charge”. So if someone took out a 1,000 yuan ($ 152) contract, they would only receive a deposit of 700 yuan ($ 107). Then, if the loan was not repaid within seven days, the borrower would be charged a daily compound interest of 10% based on the contract value of 1,000 yuan ($ 152).
Authorities say the gang often falsified paperwork to increase the value of the contract in order to monetize the interest rate.
One victim said he borrowed 2,000 yuan (US $ 305) at first and was asked to apply for loans in other apps to pay off that loan, which eventually led to a debt of 700. 000 yuan (US $ 107,000).
The man said he was coerced and threatened every day and that his family eventually sold his apartment to pay the gang.
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