Jia Zhihong, life imprisonment! He used 80 tons of "gold-clad copper" to defraud 20 billion yuan! The richest man in a province was also "dragged into the water"

National Business Daily

2024-05-28 13:22Posted on the official account of Sichuan Daily Economic News

In June 2020, a fake gold case involving an amount of 20 billion yuan shook the whole country! As one of the largest gold jewellery manufacturers in China, Wuhan Jinhuang Jewellery Co., Ltd. (hereinafter referred to as "Jinhuang Jewellery") has pledged a large amount of gold to a number of financial institutions for financing. Later, Jinhuang Jewelry defaulted, and the creditors then took the pledged gold for inspection, and found that it was fake gold!

Among them, 7 years ago, he was still one of the top ten richest people in China, and his net worth once surpassed Xu Jiayin's former richest man in Shandong, capital tycoon, and the head of the Oceanwide Department, Lu Zhiqiang, who suffered heavy losses, and his Minsheng Trust involved an amount of more than 4 billion yuan. This also became the fuse for the collapse of the Oceanwide business empire.

On May 28, 2024, the Wuhan Intermediate People's Court publicly announced the verdict of 18 defendants, including Jinhuang Jewelry and the actual controller Jia Zhihong, in the first instance, and Jia Zhihong was sentenced to life imprisonment, confiscation of all personal property, and deprivation of political rights for life.

The default of the 1 billion yuan trust led to a shocking case

80 tons of fake gold defrauded 20 billion in financing

In October 2019, after the expiration of the 1 billion yuan Chang'an Trust-Jinhuang No. 3 Loan Collective Fund Trust Plan, Chang'an Trust announced that the plan was extended for six months because the borrower Jinhuang Jewelry failed to repay the principal and interest of the loan as agreed in the contract. Six months have passed, and Jinhuang Jewelry has not completed the payment of the "Jinhuang No. 3 Loan Collective Fund Trust Plan", which has led to the default of nearly 10 billion products of many trust companies. The institutions involved include Minsheng Trust, Dongguan Trust, Anxin Trust, Chang'an Trust and other institutions.

However, the gold pledged by these funds turned out to be a fake of "gold clad copper"! The "fake gold" case that shocked the whole country was thus exposed. It is reported that Jinhuang Jewelry has obtained a total of about 20 billion yuan of financing from financial institutions with these fake gold with gold plated on the surface and copper alloy inside, with an unexpired financing amount of about 16 billion yuan, corresponding to more than 80 tons of pledged gold.

According to public information, Jinhuang Jewelry was established in August 2002, changed to a joint-stock company as a whole in October 2007, and was successfully listed on the NASDAQ in the United States on August 18, 2010, stock code: KGJI. According to its official website, Jinhuang Jewelry is one of the largest gold jewelry manufacturers in China, integrating R&D, design, production, manufacturing and wholesale.

In the years before the incident, Wuhan Jinhuang Jewelry had been very frequently financed through trust, and the "Jinhuang Trust Plan" had one thing in common - its credit enhancement measures were all "insurance company underwriting + physical gold pledge", and the specific risk control measures were:

1. Gold pledge: Jinhuang Company provides its legal physical gold pledge not lower than the AU9995 standard of the Shanghai Gold Exchange, and the pledge rate of the principal of the pledge is controlled within 75% before the trust is lend;

2. Guarantee: Jia Zhihong, the actual controller of Jinhuang Jewelry, provides personal unlimited joint and several liability guarantee;

3. Monitoring measures: (1) The pledged physical gold is directly stored in the safe deposit box of Wuhan local commercial bank, and the safe deposit box is sealed. (2) During the pledge period, no inventory shall be checked, and the safe deposit box shall not be opened, so as to achieve static pledge.

The company was delisted

The actual controller was sentenced to life imprisonment

After the low-level counterfeiting method of "gold and copper" was discovered, Wuhan Jinhuang was delisted, and the actual controller Jia Zhihong was arrested.

On May 28, 2024, the Intermediate People's Court of Wuhan Municipality, Hubei Province, publicly pronounced the verdict in accordance with the law in the case of contract fraud, fraudulent loans, illegal issuance of loans, bribery of non-state functionaries, bribery of non-state functionaries, embezzlement of duties, and counterfeiting of registered trademarks by 18 defendants, including Wuhan Jinhuang Jewelry Co., Ltd., Wuhan Jinhuang Industrial Group Co., Ltd., Hefei Boyin Investment Consulting Co., Ltd. and Jia Zhihong.

Defendant Jia Zhihong was sentenced to life imprisonment, confiscation of all personal property, and deprivation of political rights for life on charges of contract fraud, bribery by non-state functionaries, and bribery of non-state functionaries. The other defendants were sentenced to fixed-term imprisonment ranging from three years and two months to 12 years and corresponding property penalties, and the defendants Wuhan Jinhuang Jewelry Co., Ltd., Wuhan Jinhuang Industrial Group Co., Ltd., and Hefei Boyin Investment Consulting Co., Ltd. were sentenced to corresponding fines.

More than 100 people, including representatives of the enterprises involved in the case, family members of the defendants, and people from all walks of life, attended the trial and announced the verdict.

According to the company's information, Jia Zhihong, born in 1961, is a Chinese national and has no right of permanent residence abroad. Since August 2016, he has served as executive director and general manager of Wuhan Jinhuang Industrial Group Co., Ltd., senior economist, master of business administration from Wuhan University, and has won many honors such as "China's outstanding private technology entrepreneur".

Up to now, the unfulfilled amount of the final case under Jia Zhihong's name still exceeds 15 billion yuan.

The capital tycoons suffered heavy losses

The 200 billion business empire collapsed

In the "fake gold" case, the heaviest losses were Minsheng Trust and the capital boss Lu Zhiqiang behind it, which was regarded as the fuse for the collapse of the Oceanwide business empire.

As the helmsman of the "Oceanwide Department", Lu Zhiqiang was born in Weihai, Shandong Province in 1952 and started his business in 1985. Subsequently, he established Oceanwide Holdings, which was listed on the Shenzhen Stock Exchange in 1994, making it one of the earliest listed companies in China's real estate industry.

Before 2014, Oceanwide Holdings' business was mainly real estate development, and since then, the company has begun to transform into the financial field, merging financial assets such as trusts, insurance, securities, futures, pawns, and asset management through acquisitions. In 2016, Oceanwide Holdings ushered in a highlight moment, achieving revenue of 24.67 billion yuan, a year-on-year increase of 79.4%, setting a historical record. In 2018, Oceanwide Holdings' assets exceeded 200 billion yuan.

Lu Zhiqiang's personal wealth also rose, and in 2015 and 2016, he entered the top ten of the "Hurun Report" consecutively, and his net worth surpassed Xu Jiayin. In 2015, Lu Zhiqiang became the richest man in Shandong with a wealth of 83 billion yuan. As of 2020, Lu Zhiqiang's net worth is still as high as 62 billion yuan, ranking 66th.

According to the Shanghai Securities News, Lu Zhiqiang had previously tried to pull Xu Jiayin, and in March 2020 alone, Oceanwide International spent a total of 62.806 million US dollars (about 450 million yuan) to continuously purchase a total of 77.4 million US dollars of China Evergrande notes. He was rated as "Xu Jiayin's good brother" by the media.

However, Minsheng Trust involved more than 4 billion yuan in the "fake gold" case, and under the pressure of many parties, Minsheng Trust and other trust institutions involved advanced funds to investors, which also led to the credit impairment loss of about 2.52 billion yuan in 2020, accounting for 56.1% of its total profit. Combined with the provision for impairment of some overseas projects and goodwill, the income of Wuhan real estate projects affected by the epidemic did not meet expectations, and foreign exchange losses, Oceanwide Holdings turned from profit to loss in 2020.

Since then, Oceanwide's financial business has continued to "explode", and Minsheng Trust alone has repeatedly "stepped on the pit", encountering a series of events such as the "Carrot Chapter Incident of China Construction Fifth Bureau", the overdue bonds of Xinhualian, and the default of Baoneng Trust. Eventually, it led to the complete collapse of the pan-ocean system.

In order to alleviate the financial pressure, Oceanwide Holdings began to sell assets for recovery very early. At the beginning of 2021, a project in Wuhan, a subsidiary of Oceanwide, was transferred for a total price of 3.066 billion yuan. In addition, Oceanwide Holdings will also sell its Zhejiang project and a number of overseas projects. Financial assets are also sold. Taking Minsheng Securities, which is regarded as "Oceanwide's best financial asset", as an example, due to the overdue debt of 1.26 billion yuan from Oceanwide Holdings to Shandong High-speed, in March 2023, 3.471 billion shares of Minsheng Securities held by Oceanwide Holdings were listed on the foreclosure platform, with a starting price of about 5.865 billion yuan, and finally Guolian Group auctioned it for 9.105 billion yuan. Combined with the previous active sale, as of the end of June of that year, the proportion of Minsheng Securities shares held by Oceanwide Holdings had dropped to 31.23%. In addition, the shares of financial assets such as Minsheng Trust and Minsheng Bank held by Oceanwide Holdings have also been actively or passively sold, but it is also a drop in the bucket.

Today, Oceanwide Holdings and Minsheng Holdings, the two major listed companies of Oceanwide, have been forced to delist. On February 7 this year, *ST Oceanwide (i.e., Oceanwide Holdings) announced that the company's shares had been terminated by the Shenzhen Stock Exchange and delisted on the same day. On April 26, *ST Civil Control (i.e., Minsheng Holdings) announced that it had received the announcement of the Shenzhen Stock Exchange's "Prior Notice" that the Shenzhen Stock Exchange planned to decide to terminate the listing and trading of the company's shares.

Lu Zhiqiang has become the person subject to execution, and the amount involved is nearly 8.5 billion yuan, and he is also restricted from high consumption. His name can no longer be found in the latest "Hurun Report".

Editor|Duan Lian Du Hengfeng

Proofreading|Sun Zhicheng

Cover image: Visual China (not related to the picture or text)

The daily economic news is synthesized from Wuhan Intermediate People's Court, Meijing.com, China Securities Journal, Shanghai Securities News, Red Star News, announcements of listed companies, public information, etc

National Business Daily

View original image 619K

•