2500 orders? First major shipyard pyramid scheme case exposed in China

       Acquire shipyard, fabricate huge orders of 2,500 ships worth 100 billion euros to carry out pyramid schemes, falsely claim huge returns from listing on exchanges in Shenzhen and Hong Kong. 21 criminal suspects involved in the case, with over 12,000 people implicated. The first major pyramid scheme case in China disguised as ship order financing has been cracked, and the details of the case have finally been exposed.

21 criminal suspects involved in the case, with over 12,000 people implicated.

According to news from the Fuan City Public Security Bureau in Fujian Province, the Fuan City Public Security Bureau recently launched simultaneous arrest operations in Fuzhou, Ningde, and Fuan, cracking a major pyramid scheme case. A total of 21 criminal suspects involved were arrested, 240 capital accounts were frozen, and over 27 million yuan in account funds, cash, and a large number of items involved in the case were frozen or seized.

In August this year, the Fuan City Public Security Bureau discovered that "Huanyun (Fujian) Equipment Manufacturing Service Co., Ltd." in Xiabaishi, Fuan, was highly suspected of organizing and leading pyramid schemes, involving over 12,000 people. On September 17, the police initiated an investigation.

After nearly two months of meticulous investigation and evidence collection, the organizational chain of "Huanyun Company's" alleged pyramid scheme became clear, and evidence of its illegal activities gradually accumulated, making the time ripe for arrests. On November 5, the Fuan City Public Security Bureau's arrest team successfully apprehended 21 individuals, including the principal perpetrators Chen Moujia (male, from Fuan), Chen Mouyi (male, from Fuan), Zheng Moumou (male, Hong Kong resident), Wang Mou (female, from Heilongjiang), and Wang Moumou (male, from Chongqing). All major criminal suspects in the case have been brought to justice. Currently, the case is under further investigation.

Registering a Shell Company for a 300 Million Yuan Acquisition of an Old Fujian Shipyard.

It is understood that "Huanyun (Fujian) Equipment Manufacturing Service Co., Ltd." (referred to as Huanyun Company), a pyramid scheme led by criminal suspects Chen Li and Zheng Yujie, was registered on December 20, 2016, with a registered capital of 300 million yuan and zero paid-in capital.

On December 30, 2016, Huanyun Company acquired all existing assets of Fuan Huan'ao Ship Development Co., Ltd. for 300 million yuan. According to Huanyun Company's official website, the enterprise address of Huanyun (Fujian) Equipment Manufacturing Co., Ltd. is located within Huan'ao Shipyard in Cun'tou Village, Xiabaishi Town, Fuan City, Ningde City, Fujian Province.

Fuan Huan'ao Ship Development Co., Ltd., established in 1993, covers an area of over 100,000 square meters. It currently possesses one 15,000-ton dry dock, one 8,000-ton semi-docking berth, one 30,000-ton shipbuilding berth, and one 10,000-ton outfitting floating dock. Its main businesses include ship manufacturing and repair, ship dismantling, sales of ships and ship materials, and self-operated and agency import/export of goods and technologies.

Since its establishment, Huan'ao Shipyard has repaired and built over 280 steel vessels of various types, including bulk carriers, oil tankers, container ships, liquefied gas carriers, and offshore engineering vessels. Its ships are registered in major domestic ports, Hong Kong and Taiwan regions, as well as countries such as Japan, Panama, and Cambodia.

According to International Shipnet, in March 2011, a 3600m3 liquefied gas carrier built by Fuan Huan'ao Ship Development Co., Ltd. was delivered for use. This vessel was the first liquefied gas carrier built in Fujian Province, filling a gap in Fujian Province's liquefied gas carrier construction capabilities.

Huan'ao Shipyard is a national second-class type A steel vessel production enterprise, having obtained CCS quality management system certification. It has been approved by the Fujian Provincial Port and Coastal Defense Office as a "Designated Foreign Ship Repair Enterprise in Ningde Baima Port" and a "Taiwanese Ship Repair Business Base." It is also a backbone enterprise for ship repair and building in Fuan City. Currently, Huan'ao Shipyard is a member unit of associations such as the China Association of the National Shipbuilding Industry and the Chinese Society of Naval Architects and Marine Engineers.

Fabricating Orders for 2,500 Ships Valued at 100 Billion Euros to Conduct Pyramid Schemes.

After acquiring Huan'ao Shipyard, criminal suspects Chen Li, Zheng Yujie, and others affiliated Huanyun Company under Huan'ao Shipyard. They fabricated claims of undertaking national shipbuilding orders worth hundreds of billions of euros and needing 2 billion yuan in financing as a pretext. Using methods like equity crowdfunding, dividend splitting, and asset packages as false propaganda, they claimed that joining the company would yield returns hundreds of times over. They also set up 14 branches across the country to recruit downlines, conducting pyramid schemes through equity crowdfunding by attending investment conferences and WeChat investment groups.

In investment WeChat groups, Huanyun Company claimed: "The China Shipbuilding Association has awarded Huanyun Company Belt and Road shipbuilding orders for 2,500 ships worth 100 billion euros, with a net profit of 230 billion yuan, to be completed in five years. As long as you participate in Huanyun option shares, you will get 100% returns, steadily acquiring five types of returns from three major categories. The three major categories of returns are static income, dividend income, and income after the company's listing."

Huanyun Company stipulated that an investment of 7,000 yuan or 35,000 yuan was required to become a company "shareholder." After becoming a "shareholder," "shareholders" would receive equity contributions of 8,000 and 80,000 respectively, along with shareholder equity certificates. Before the company's listing, "shareholders" would receive three dividends to mandatorily recover their capital, and seven dividends would yield a tenfold return. Additionally, the company would annually distribute shipbuilding profits to all "shareholders"; for example, an investment of 7,000 yuan would yield an annual permanent dividend of 10,000 to 50,000 yuan. After the company's listing, annual dividends to shareholders would result in a high return of at least 30 to 50 times, with a maximum return of 300 to 500 times.

On May 22, 2018, Huanyun Company and its executives subscribed 500,000 yuan to become shareholders of Dongqi Hailang Company. Huanyun Company externally claimed, "The company will manufacture equipment for Dongqi Hailang Company by year-end, with a single production line costing 30 billion yuan and an annual profit of approximately 200 to 600 billion yuan, profiting from building wave power plants." Huanyun Company stipulated that investors could also obtain the right to subscribe for dividend shares of Fujian Dongqi Hailang Power Generation Investment Co., Ltd., and after subscribing to the power generation equity dividend shares of Dongqi Hailang Company, they would receive 15 years of cash dividends.

In addition to the high returns mentioned above, "shareholders" of Huanyun Company could also receive direct referral bonuses, team matching bonuses, management bonuses, and point bonuses if they developed downlines. If each "shareholder" directly developed three or more "shareholders" of three-star level or higher, the company would also award 200,000 in equity. As their network gradually increased, there would also be car awards and other benefits based on their level.

Falsely Claiming Huge Returns from Listing in Shenzhen and Hong Kong.

To recruit members and make participants believe in outrageously high investment returns, Huanyun Company went to great lengths. On November 10, 2017, Huanyun Company claimed to have acquired Shenzhen Shunchuang Fund Management Co., Ltd. in Qianhai, Shenzhen, with 100% equity, thereby obtaining a private equity license. However, a search on the website of the Asset Management Association of China revealed no relevant information about this company; clearly, Shunchuang Fund Management Company had not obtained a private equity license at all. On November 23 of the same year, Huanyun Company was listed on the Shenzhen Qianhai Equity Exchange Center, with stock code 669543.

Reports indicate that over 160 people attended the listing ceremony, including representatives from the Hong Kong Enterprise Equity Transfer Management System Center, Zheng Zuhua (Chairman of Huanyun (Fujian) Equipment Manufacturing Co., Ltd.), Chen Ruizhong (Vice Chairman of Huanyun (Fujian) Equipment Manufacturing Co., Ltd.), Wang Ying (Vice Chairman and Executive Director of Huanyun (Fujian) Equipment Manufacturing Co., Ltd.), leaders from the Ministry of Transport, and industry investors.

Reports state that large industries require substantial capital for significant growth. Today, Huanyun Equipment Manufacturing's successful listing on the Hong Kong Third Board capitalizes on current economic trends, closely monitors market demands within the industry, promotes the development of the shipbuilding industry, and enhances the competitiveness of Huanyun equipment and the Chinese shipbuilding industry.

At the award ceremony, representatives from the Hong Kong Third Board presented a plaque to Huanyun Equipment Co., Ltd.

However, reporters found no record of the equity code at the Hong Kong Enterprise Equity Transfer Management System Center. Additionally, according to professionals, there are no stocks in Hong Kong with three-digit codes. At most, this company may only be listed, not publicly traded.

Huanyun Company claims that "the listing on the Hong Kong Third Board is merely a milestone in Huanyun Equipment's development. In the future, Huanyun Equipment will become a more regulated, transparent, and profitable listed company with better financing security. We will use better performance to reward the capital market and faster development to fulfill our social responsibilities. Huanyun Company will work with its employees and shareholders to build a Huanyun community of shared destiny. Based on the strong profits of the real economy, we will build Huanyun's "Great Health Industry Park," a comprehensive living and working area that organically combines material and spiritual civilization. In terms of food, drink, play, entertainment, commerce, residence, and tourism, it will embody organic, nutritious, high-tech, intelligent, and rapid high-level material civilization living areas. It will include a shipbuilding technology research institute, a new energy technology development college, a private school, high-quality elderly care, TCM health preservation, tourism, moral lectures, and cultural performances. Ultimately, we will achieve the communist life of the Huanyun community of shared destiny."

However, concurrently with Huanyun's "listing," in August of this year, Fu'an police discovered that Huanyun Company was suspected of a major crime involving the organization and leadership of a pyramid scheme. After nearly two months of meticulous investigation and evidence collection, evidence of Huanyun Company's illegal activities related to pyramid schemes was gradually gathered. On November 5th, the Fu'an City Public Security Bureau successfully cracked this case, which was supervised by the Provincial Public Security Department, the "2018.8.28 Case of Organizing and Leading Pyramid Schemes."

Justice will prevail. This first domestic pyramid scheme case using shipbuilding orders as a guise has finally been solved.