Jia Zhihong, who made a fortune mysteriously, how to play the Golden Phoenix scam

喻观FINANCE

2024-06-08 09:17Published in Inner Mongolia

Text: Yu Yan

Edited by Wu Ge

Produced by Yuguan Finance

As the saying goes, "buy gold in troubled times". Under the complex and severe economic situation and the disturbing international changes, gold, as a hard currency, is favored by all parties, and its price has repeatedly broken record highs in recent years.

Since 2013, the mainland has been the world's largest consumer of gold. For Chinese people, gold is not only a consumer product, but also an investment product.

What would you feel if you found that the yellow and clear gold you bought had turned into a pile of scrap copper and rotten iron?

This kind of feeling like falling into an ice cave was experienced by Minsheng Trust four years ago.

Four years ago in May (May 22, 2020), the staff of Minsheng Trust obtained a gold test report with a line of words: "The surface of the gold bar is gold-plated, and the internal composition is copper alloy, not Au999.9 pure gold".

This is the test result of the gold pledged by Wuhan Jinhuang Jewelry Co., Ltd. (hereinafter referred to as "Jinhuang Jewelry") submitted for inspection by Minsheng Trust six days ago.

The shocking case of 83 tons of "fake gold" fraud of 20 billion yuan in Wuhan Jinhuang Jewelry was detonated, and more than 10 financial institutions such as banks, insurance, and trust companies were involved.

Previously, according to Caixin, before Minsheng Trust opened the box for testing, the staff received a message from Jia Zhihong, the protagonist of the fake gold case, asking "can you not do third-party testing". After being rejected, he sent another message, thanking Minsheng Trust for its support, and finally said: "Farewell!" ”

Four months later (September 2020), Jia Zhihong did "say goodbye" - he was taken away for investigation, and since then he has bid farewell to the free sky.

Four years later, Jia Zhihong, who is already 63 years old, appeared in public again and stood in court as a defendant.

On May 28, the Intermediate People's Court of Wuhan City, 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 people, including Jinhuang Jewelry, Wuhan Jinhuang Industrial Group Co., Ltd. (hereinafter referred to as "Jinhuang Industrial"), Hefei Boyin Investment Consulting Co., Ltd. (hereinafter referred to as "Boyin Investment") and Jia Zhihong.

According to media reports, the trial information shows that in a period of up to five years, Jinhuang Jewelry used fake gold to defraud 16 financial institutions and companies to obtain funds, of which 24.755 billion yuan was fraudulently obtained from financial institutions, causing a total loss of 14.148 billion yuan to financial institutions.

As the protagonist of the fake gold case, Jia Zhihong was sentenced to life imprisonment, confiscated all his personal property, and deprived of political rights for life for the crimes of contract fraud, accepting bribes from non-state functionaries, and offering bribes to non-state functionaries.

It also means that he will spend the rest of his life in prison.

After four years, the Jinhuang fake gold case has basically settled so far. In the past four years, the morning bell and the dusk drum have been different.

Hengfeng Bank, which opened the prelude to the Jinhuang case, completed the restructuring and share reform and was reborn. Minsheng Trust, the hardest-hit trust, is in the process of clearing its assets and verifying its capital. Sichuan Trust declared bankruptcy. Anxin Trust changed its name to Jianyuan Trust to toast to the past.

A group of people related to the Golden Phoenix case received their own lives.

An absurd drama finally came to an end. It's just that people can't help but wonder, how did a financial layman play this shocking scam?

Fake gold traps 16 "gold owners"

Four years ago, in the fog of the new crown epidemic, the financial circle was thundered.

On New Year's Day 2020, Jinhuang Jewelry received several documents from the Yantai Intermediate People's Court and became the person subject to execution. This shocking fake gold case was thus unveiled.

The complaint filed with the Yantai Intermediate People's Court was the Yantai Huanshan Road Branch of Hengfeng Bank. Hengfeng Bank, the largest financier of Jinhuang Jewelry, signed a current loan agreement in December 2015 and a gold lease agreement in January of the following year.

According to the later trial information, the specific trader was Zhang Shuyun, then vice president of the Yantai Huanshan Road Branch of Hengfeng Bank. From 2016 to 2017, it helped Jinhuang Jewelry obtain a loan of 6.96 billion yuan, for which it received a benefit fee of 30 million yuan from Jia Zhihong (which was returned to Jia in November 2020).

At that time, Hengfeng Bank itself was also "very busy", in addition to colluding with Jinhuang Jewelry, it was also busy acquiring Junkang Life Insurance. Soon after, the infighting in Hengfeng Bank led to a major case led by Cai Guohua, and led Cai Guohua's fate to the end of the fall. That's another story.

After four years of cooperation with Jinhuang Jewelry, Hengfeng Bank, which has changed its course, cleared up the old accounts of history, and in May and July 2019, launched a number of lawsuits, taking Jia Zhihong, Jinhuang Jewelry and related parties to court, becoming the "whistleblower" of the Jinhuang case.

At that time, Jinhuang Jewelry had already shown signs of risk. In October 2019, a "Chang'an Trust-Jinhuang No. 3 Loan Collective Fund Trust Plan" with an amount of 1 billion yuan expired and was not repaid. To this end, Chang'an Trust issued an announcement saying that the plan was postponed for six months because the borrower Jinhuang Jewelry failed to repay the principal and interest of the loan as agreed in the contract.

Chang'an Trust is the first trust company that Jinhuang Jewelry cooperated with with gold pledge, and before that, its financing partners were mainly banks. According to reports, under the leadership of Cheng Wanli, then the general manager of the Wuhan branch of Chang'an Trust, Chang'an Trust cooperated with Jinhuang Jewelry as early as December 2013 to establish the first Jinhuang Jewelry Loan Collective Fund Trust Plan.

Later, Cheng Wanli joined Dongguan Trust, and Dongguan Trust also cooperated deeply with Jinhuang Jewelry, and its cooperation (defrauded) amount ranked third (3.4 billion yuan).

Dongguan Trust was the first to expose the fake gold truth of Jinhuang Jewelry.

On January 6, 2020, Jinhuang Jewelry returned 15 million yuan of financing principal to Dongguan Trust, and the two parties proposed to the underwriter, PICC Property Insurance Wuhan Branch, to reduce the underlying gold by 100 kilograms (100 yuan) under the policy, and applied for the procedures for policy approval and subject discharge.

Two days later, the three parties sent personnel to the vault of the Wuhan branch of the Industrial Bank, randomly selected a safe deposit box, took out 100 kilograms of gold and handed it over to Jinhuang Jewelry. Subsequently, Jinhuang Jewellery handed over the gold to Dongguan Trust, which deposited the gold in a safe deposit box leased by IB.

On February 14, 2020, Dongguan Trust said that it randomly selected 1KG (1 piece) from it and sent it to Guangdong Gold, Silver and Jewelry Testing Center Co., Ltd. (Guangdong Provincial Quality Supervision Gold, Silver and Jewelry Monitoring Station) for testing. The test concluded that it was copper alloy instead of AU999 pure gold.

As a result, Dongguan Trust reported the case and claimed compensation from the Wuhan Branch of PICC Property and Casualty Insurance.

Minsheng Trust, the second largest "gold owner" of Jinhuang Jewelry, did not find out that the gold was fake until three months later.

Previously, on December 27, 2019, Minsheng Trust announced to Jinhuang Jewelry that the relevant financing would expire early, and filed a lawsuit with the Wuhan Intermediate People's Court half a month later (January 13, 2020).

On March 15, 2020, Minsheng Trust signed a cooperation agreement with Jinhuang Jewelry, agreeing to dispose of no less than RMB 3 billion of gold through gold smelters, pawnshops and other channels to help it alleviate its liquidity difficulties.

A month later (April 15, 2020), Minsheng Trust applied to the Wuhan Intermediate Court to start the appraisal and auction process of the pledged gold. Another month later (May 16, 2020), the Wuhan Intermediate People's Court organized an evaluation and testing agency to conduct an on-site evaluation and testing of 2990KG of gold from Jinhuang Jewelry stored in the safe deposit box of Wuhan Guohu Branch of Industrial and Commercial Bank of China.

For this test, Jia Zhihong tried to stop it but failed. On May 22, 2020, the Wuhan Intermediate People's Court delivered the test report to Minsheng Trust. The test results showed that the gold bar submitted for inspection was "gold-plated on the surface, and the internal composition was copper alloy, not pure gold of Au999.9".

At this point, the fake gold case of Jinhuang Jewelry broke out in full swing. On June 6, 2020, Hubei Zhongjing Trading Company forcibly opened the box and found that the box was also fake gold. Subsequently, the media began to follow up, and the fake gold case was exposed to the public.

Among the trust companies that Jinhuang Jewelry cooperates with, Minsheng Trust is the largest (6.4 billion yuan) in cooperation with it, and it has also become the most seriously injured. A pile of scrap copper and rotten money led the fate of Minsheng Trust and its actual controller Lu Zhiqiang to the abyss. The former "big man behind the big guy" "sitting" on huge debts in the year of the sixtieth year, and the two stocks in his hand, Oceanwide Holdings and Minsheng Holdings, have been delisted.

Anxin Trust and Sichuan Trust, which rank third and fourth as the "trust financiers" of Jinhuang Jewelry, have successively become typical examples of risk disposal. Fortunately, after several years, the two companies have completed the risk disposal one after another.

This shocking scam, which Boss Jia has carefully woven for several years, has dragged 16 financial institutions and companies into the quagmire. According to the announcement disclosed by Jinhuang Jewelry on NASDAQ on July 6, 2020, as of the time of the case, its unexpired financing stock was about 16 billion yuan, and the corresponding pledged gold was about 83.03 tons (about 4% of the national gold reserves in 2019).

According to the trial information, Jinhuang Jewelry used fake gold to defraud financial institutions to obtain loans of up to 24.755 billion yuan, causing a total loss of 14.148 billion yuan to financial institutions.

Interestingly, in this fake gold case, the only "money owners" who were deceived were three Hubei companies, Hubei Zhongjing Trading Company, Hubei Provincial Financial Leasing Company, and Hubei Yongtai Small Loan Company, and none of the local financial institutions waded into this troubled water.

Generally speaking, local taxpayers and well-known listed companies are often the sweets that financial institutions compete for, but Jinhuang Jewelry is so ignored, which in itself is a signal worthy of vigilance by financial institutions. Therefore, after the Jinhuang case, many people in the industry analyzed that there was no innocent party involved in this fake gold case.

At that time, the former China Banking and Insurance Regulatory Commission also pointed out on its official website that the Jinhuang case reflected that "the internal control and risk management of some financial institutions are in vain". On July 16, 2020, the person in charge of the relevant department of the former China Banking and Insurance Regulatory Commission summarized the problems existing in the Jinhuang fake gold case with "three inadequacies" at the regular briefing: risk management and control are not in place, verification is not in place, and product management is not in place.

Jia Zhihong used nearly 100 tons of fake gold to defraud the funds from 16 "gold owners", where did it go?

According to The Paper, the trial information shows that the main uses or destinations of its funds are as follows:

The repayment of the principal and interest of the loan was 17.462 billion yuan

322 million yuan was paid for insurance premiums, gold leasing fees and other expenses

92 million yuan of consulting fees, consulting fees and arrangement fees were paid

Jia Zhihong and other personal accounts withdrew cash and spent 18 million yuan

Paid 3.689 billion yuan for equity investment

Purchased 2.723 billion yuan of real gold from the Shanghai Gold Exchange

343 million yuan was transferred to non-related parties

88 million yuan was paid to the Trust Protection Fund

378 million yuan was paid for the transfer of trust income rights

After the transfer, it flowed into the corporate and personal accounts controlled or controlled by Jinhuang Jewelry and Jia Zhihong for operating expenses and other expenses of 76 million yuan

Gold turns to copper, a strange thing

The strange thing about this case is that when the gold was clearly put into the box, and the password and key were kept in the hands of the trust company's personnel, why did the gold in the safe deposit box turn into scrap copper and rotten iron?

The secret of magic lies in the trick. The Jinhuang fake gold case is actually a "group play" played by blindfolding.

According to The Paper, the personnel of the relevant departments of Jinhuang Jewelry "performed their duties" in this fake gold case. Qian Lei, the manager of the sales department, was responsible for purchasing fake gold from Shenzhen from 2015 to 2019, and received more than 1,400 yuan in rebates for this.

Xu Zhengquan, the manager of the investment department, provided Qian Lei and the financial staff with the style and number of the gold raw materials of the Shanghai Gold Exchange (about 2.773 billion yuan of gold purchased from the Shanghai Gold Exchange is genuine) as a sample of fraud. Zhai Fengqun, the director of the sending and receiving department of the workshop, is responsible for the counterweight, sending and receiving of real and fake gold. Tang Jie, the settlement officer of the finance department, is responsible for the custody and registration of fake gold.

Zhang Rusong, the director of the workshop, Song Gaofeng, Zhai Fengqun, the director of the inverted mold department, and Tang Jie, the settlement officer of the finance department, formed a gold testing team and performed the key plot - package adjustment.

The transfer of real and fake gold takes place in the process of gold sampling and smelting. When adjusting the package, Zhang Rusong deliberately did not record the video. In the gold spectrum detection link, Tang Jie was responsible for adjusting the spectrum detector, thus issuing a false report.

As a result, under the noses of the trust company personnel, the drama of turning gold into copper was quietly completed.

At the material time, a total of 105.77521 tons of fake gold pledged by Jinhuang Jewelry in the bank safe deposit box were pledged.

Immediately afterwards, another group of insurance companies came into play.

Different from other fake gold cases, Jia Zhihong, a financial layman, is well versed in the magic of financial leverage, and has created a set of financing models of "physical gold pledge + insurance company underwriting", which not only traps banks and trust companies, but also involves two insurance companies, PICC Property Insurance and China Reinsurance (Group) Co., Ltd. (hereinafter referred to as "China Reinsurance Group", 1508.HK).

Since 2015, PICC P&C Wuhan Branch and Dadi P&C Hubei Branch have respectively entered into insurance contracts with Jinhuang Jewelry. At the time of the case, Jinhuang Jewelry cooperated with two insurance companies, with a total of more than 70 policies, with a total insurance amount of 30 billion yuan.

As for how much Jinhuang Jewelry paid for these more than 70 policies, there is no clear public statement at present. Judging from the trial information, the premiums and other expenses such as gold leasing fees paid by it totaled 322 million yuan.

The "ingenuity" of this insurance contract is that:

The main insurance contract is a property insurance contract, and both the policyholder and the insured are Jinhuang Jewelry, and in the List of Special Agreements, the trust company is the single beneficiary under the property insurance contract.

According to the requirements of the "Basic Property Insurance Clause (2009 Edition)", if there is no special agreement between the two parties to the insurance contract and the insured value is stated in the insurance contract, gold, silver, jewelry, etc. are not the subject matter of the insurance contract.

In view of this, PICC P&C Wuhan Branch expanded gold as the subject of underwriting in a special way by special agreement. However, at the same time, it is stipulated that only the insurance liability for gold "quality and weight not in accordance with the policy" caused by fire, explosion, lightning strike, falling of flying objects and other aerial objects, theft, robbery risk and other reasons.

There are two "key gentlemen", one is Shi Wei, an insurance intermediary, and the other is Jia Zhihong's brother-in-law, Zou Dachun, then general manager of the Wuhan Dongxihu Branch of PICC Property and Casualty Insurance.

According to the trial information, Shi Wei facilitated the insurance company to increase the list of special agreements, and personally directed the handling of gold pledges, from which he received 28 million yuan in insurance commissions.

Although Zou Dachun knew that the gold used for the pledge of Jinhuang Jewelry was fake, he not only printed a fake business card for Shi Wei as a staff member of the Wuhan Dongxihu Branch of the People's Insurance Company, but also arranged for his subordinates to form a so-called Jinhuang business team to cooperate with Shi Wei to make the play.

In the end, Shi and Zou were both sentenced on suspicion of fraudulently obtaining loans, but their illegal acts dragged PICC Property Insurance and Dadi Insurance into a years-long judicial dispute.

At that time, some people in the legal profession believed that this model was a special agreement between Jinhuang Jewelry and the trust company to use insurance as a precondition for issuing loans, which was essentially equivalent to the insurance company providing a guarantee.

Insiders in the insurance industry pointed out that the special promise of the insurance policy that "if the quality and weight do not conform to the provisions of the policy, it will be deemed to have occurred as an insured event", which has exceeded the insurance liability risk borne by the basic property insurance, which is an expansion of insurance liability and essentially turns the insurance policy into a guarantee tool.

Whether the nature of the special agreement in the insurance contract was property insurance or guarantee insurance also became the focus of the dispute between the parties in the Golden Phoenix Jewelry case.

The Measures for the Supervision of Credit Insurance and Guarantee Insurance Business issued by the former China Banking and Insurance Regulatory Commission (CBIRC) in May 2020 also emphasized that when an insurance company carries out credit insurance business, it shall not substantially change the approved or filed credit insurance products through special policy agreements or the signing of supplementary agreements.

When Minsheng Trust and other trust companies found out that the gold was fake, they claimed compensation from PICC Property Insurance or Dadi Insurance as the insurer as the first beneficiary of the policy.

PICC P&C Insurance, on the other hand, argues that the special clause is based on the basic insurance clause and the additional clause, and as an annex to the insurance contract, it cannot exist independently from the insurance contract, so it does not change the nature of the property insurance master contract.

Chinese executives also responded at the interim results conference held in August 2020, "Wuhan Jinhuang used false gold to insure, which does not fall within the scope of insurance liability under the insurance contract." According to the relevant laws and regulations, the insurance contract is invalid or can be revoked or terminated, and our company is not liable for compensation. ”

In July 2020, Minsheng Trust convened a group of legal experts to discuss the contract dispute between Minsheng Trust and the insurance company. On the other hand, PICC P&C also held a seminar of legal experts to discuss countermeasures.

On May 29, the day after the first trial of the Jinhuang Jewelry case opened, the Sichuan Trust v. Dadi Property Insurance Hubei Branch, PICC Property Insurance Wuhan Branch, and Jia Zhihong and Jinhuang Jewelry also held a trial.

To this day, the insurance contract dispute between the two insurance companies and the trust company is still unresolved.

If the court finally rules that PICC Property Insurance and Dadi Insurance are liable for compensation, even for PICC Property Insurance, the "first brother of property insurance", which has a deep foundation, it will be a heavy blow to the muscles and bones. After all, the combined net profit of the two insurance companies in 2023 is less than 25 billion yuan.

With a premium of less than 300 million yuan, 30 billion yuan of insurance is underwritten, Jia Zhihong can be described as a high and bold artist!

Mysterious family history

The Jinhuang case made Jia Zhihong famous all over the world. Before that, he was a mysterious figure.

The so-called capital tycoons who were born out of thin air have a common characteristic: their background is unknown, and the origin of the first pot of gold is unknown.

According to public information, Jia Zhihong joined the army in his early years and worked in the rear base command of a certain military region, responsible for managing the gold mines owned by a certain army. This may have been his original connection to the gold industry.

Tianyancha shows that in March 2000, a Wuhan Zhicheng Property Management Company was established, with Jia Zhihong as the director and Hu Qiao as the legal representative. This is probably the earliest information about Jia Zhihong's business that is publicly available.

Regarding the origin of Jinhuang Jewelry, its official website and the introduction of the relevant trust plan claim that the predecessor of Jinhuang Jewelry was a gold factory under the central bank, and in 2001, when the central bank withdrew from the tertiary industry operation, Jia Zhihong took over as a whole.

Tianyancha shows that there is a Hubei Jinhuang Jewelry Factory established in November 1993, and its shareholder is the Hubei branch of the central bank.

In March of the following year, there was a Hubei Jinhuang Jewelry Industry Co., Ltd. (currently in a state of revocation, hereinafter referred to as "Jinhuang Jewelry") also called "Golden Emperor", one of the shareholders was Hubei Zhicheng Bioengineering Company, its legal representative, chairman Hu Qiao, is Jia Zhihong's right-hand man, held important positions in many companies of the Golden Phoenix Department, and Jia Zhihong was sentenced in the same batch. Jia Zhihong himself was a director of the company.

In addition, there is also a Hubei Gold and Silver Jewelry Company (renamed Hubei Jinhuang Jewelry Company in 2007), which was established in December 1989, and the legal representative of Jinhuang Jewelry is Huang Fan.

Huang Fan's other identity is the legal representative of Wuhan Huayuan Science and Technology Development Company (hereinafter referred to as "Wuhan Huayuan"), in which Jinhuang Jewelry once had a stake and Jia Zhihong was the chairman of the company. In 2016, Wuchang fish (600275. SH), one of the main forces of Wuhan Lianfuda Investment Management Co., Ltd. (hereinafter referred to as "Wuhan Lianfuda"), has also been in and out as its shareholder.

According to industrial and commercial information, Jinhuang Jewelry was established in August 2002, with Jia Zhihong as the legal representative, contributing 1.56 million yuan, accounting for 52% of the shares.

Whether it is the Golden Emperor, Gold and Silver or Jinhuang, they are all inconsistent with the official claim of Jinhuang Jewelry that Jia Zhihong took over the central bank's tertiary production in 2001 and started in 2002.

In December 2010, the official website of the Shenzhen Stock Exchange disclosed 18 rejected IPO cases between 2008 and 2009 in the form of PPT teaching PPT for board secretaries, and mentioned in the section "Chaos 3: Related Party Transactions":

In 2008, Jinhuang Jewelry planned to be listed on the Shenzhen Stock Exchange, planning to issue 33.34 million ordinary shares (A shares), but was rejected by the China Securities Regulatory Commission at the meeting. One of the charges of Jia Zhihong and Jinhuang Jewelry is "counterfeiting registered trademarks", which may also be related to his chaotic past of unknown origin.

In any case, from 2002 onwards, the story of Golden Phoenix Jewelry began to play out.

This year coincided with the official abolition of the approval system for gold production, processing, and circulation, and the market for gold, silver, and other precious metals and their products was fully opened.

Initially, Golden Phoenix Jewelry's main business was not gold business, but platinum, and it was not until May 2003 that the manufacture and wholesale sales of gold jewelry were increased. It was also from this year that Boss Jia began to play with all kinds of empty gloves and white wolf financial skills.

In June 2003, only one year after the establishment of Jinhuang Jewelry, Jia Zhihong and another natural person shareholder increased its registered capital to 17 million yuan, of which Jia Zhihong confirmed that he contributed 8.84 million yuan and transferred 3,744 yuan to the capital reserve.

At that time, the registered capital of mainland enterprises was still paid-in, and it had to be paid up within two years from the date of establishment.

However, Boss Jia's way of increasing capital is quite unusual. According to the subsequent A-share prospectus, on June 2, 2003, Jia Zhihong and another natural person shareholder signed an equipment purchase contract worth 16.1568 million yuan with Xiamen Ximei Jewelry Co., Ltd. (hereinafter referred to as "Xiamen Ximei"), and purchased a batch of machinery and equipment from Xiamen Ximei in two installments at a total price of 95.1056 million yuan, of which Jia Zhihong invested 8.4016 million yuan.

Equipment worth 16.1568 million yuan, but the total price is as high as 95.1056 million yuan? Jinhuang Jewelry stated that its pricing was based on the net book value of the batch of machinery and equipment in Ximei Jewelry.

However, the equipment purchased by Jia Zhihong with a huge amount of money was idle for a year before it was injected into Jinhuang Jewelry by way of capital increase. And when it was recorded, the value of the machinery and equipment became 87.3503 million yuan. In addition, he will buy 29.321 million yuan of gold and platinum raw materials to sell his gold and phoenix jewelry.

As for where Jia Zhihong's huge investment in equipment and raw materials came from, Jinhuang Jewelry later claimed in the A-share prospectus that it was earned by him from the stock market - a phrase used by capital tycoons, after all, the stock market is the easiest to create the legend of getting rich overnight.

What is unreasonable is that Jia Zhihong obviously has a lot of money from the stock market, but he did not directly invest in Jinhuang jewelry, but injected capital in the form of equipment and raw materials.

From the very beginning, the story of Golden Phoenix Jewelry exudes an unusual atmosphere.

In December 2003, Jinhuang Jewelry underwent its first equity change since its establishment. The A-share prospectus claimed that the natural person shareholder, one of the founders at that time, transferred his 48% stake to Jia Zhihong and Chen Wei, then director of the Jinhuang Jewelry R&D Center, at a total transfer price of 10.56 million yuan, and Jia Zhihong's share ratio increased to 90%.

The initial investment of 1.44 million yuan surged to a value of 10.56 million yuan in only one year and four months. Warren Buffett has to bow down when he sees it, doesn't he?

In December 2004, Jinhuang Jewelry increased its capital again. Jia Zhihong still invested in machinery and equipment, and the appraisal price was as high as 79.0789 million yuan, of which 39.0789 million yuan was converted into capital reserve. After this capital increase, Jia Zhihong's shareholding ratio further increased to 96.67%.

According to the publicity of Jinhuang Jewelry, in 2006, its gold jewelry sales ranked second in the country, with a market share of 3.23%. In the following year, it became a "100-star enterprise" of Wuhan private science and technology.

The "rapid" growth of Jinhuang Jewelry has attracted many investors. According to its A-share prospectus, in August and September 2007, Jia Zhihong introduced 5 corporate shareholders and 42 natural person shareholders at an average price of 5-8.33 yuan per share. After this round of capital increase, its registered capital has increased to 100 million yuan.

In October 2007, Jinhuang Jewelry was changed to a joint-stock company and the first floor of Sanhui was established. At that time, the first chairman of the board of supervisors was none other than Qian Lei, a procurement officer in the fake gold case.

This round of capital increase also gave rise to an equity holding dispute. According to a civil ruling of the Yantai Rongcheng Court in December 2019, Hu Xianping, a shareholder introduced at that time, purchased the shares of Jinhuang Jewelry for Yantai Rongcheng Rongyiwen at a total price of 4 yuan per share and 2 million yuan, and agreed that if the shares could not be listed at the end of 2008, Hu Xianping would have to return 2 million yuan. Later, Jinhuang failed to land on A-shares, but Hu Xianping did not refund as promised, and since then he has evaporated from the world, "his whereabouts are still unknown".

The reason why it can attract a large number of new shareholders is the A-share listing plan of Jinhuang Jewelry. However, Jinhuang Jewelry's dream of being the "first share of gold jewelry companies" was soon shattered.

At that time, according to media reports, when Jia Zhihong increased his capital in the form of equipment for the first two times, he purchased it in his personal name instead of in the name of the company, which was quite suspicious, and the registered capital increased during the company's share reform in 2007 was also unknown. In addition, Jia Zhihong seems to have concealed the black history of being arrested for tax evasion and tax evasion. These have become important factors in the failure of Jinhuang Jewelry's IPO.

Jia Zhihong did not give up his ambition to go public. In February 2009, Wuhan Vogue-Show Jewelry was established in Hong Kong, with Hu Qiao as the legal representative. Subsequently, the company carried out a series of operations such as restructuring and reverse takeover with Jinhuang Jewelry.

In December 2009, Jinhuang Jewelry was listed on the OTCBB board in the United States.

On August 18, 2010, Jinhuang Jewelry was listed on the NASDAQ in the United States (stock code: KGJI) through a red-chip structure (the domestic entity Weixiu Jewelry implements management and enjoys 100% profit ownership through a VIE management agreement), raising US$20 million. Kingold Jewelry Inc. (25.6% owned by Jia Zhihong) as an overseas listed entity of Jinhuang Jewelry, consolidated its shares with Jinhuang Jewelry. As a result, Jinhuang Jewelry has become a member of the Chinese concept stocks.

In 2011, Jinhuang Jewelry also issued an additional 7.2 million shares at $3.19, raising more than $23 million. In 2013, Golden Phoenix Jewelry announced that it had entered into a private placement agreement with three investors to sell 7 million shares of common stock to three investors at a price of $1.8 per common share, raising a total of $12.6 million.

With the confidence obtained from the capital market financing, Jia Zhihong also began to embark on the road of expansion.

In March 2013, Wuhan Lianfuda Investment Management Company, which later became the main force of Wuchang Fish, was established. In 2015, Jia Zhihong successively established Wuhan Xin Jinhuang Property Management Company, Wuhan Jinhuang Internet Co., Ltd., Wuhan Weizhen Jewelry Company, Wuhan Yuhuang Jewelry Design Company, and all seven buildings in Jinhuang Industrial Park were capped.

In August 2016, on the basis of the original Wuhan Jinhuang Technology Company, Jia Zhihong established Wuhan Jinhuang Industrial Group Co., Ltd. (hereinafter referred to as "Jinhuang Group"), with Jia Zhihong as executive director and general manager.

In 2017, Jia Zhihong invested in Hubei Yongtai Small Loan Company, established Hubei Jinhongtai Financial Leasing Company, Wuhan Jinhuang Hospital Management Company, Yichang Xinluyuan Biotechnology Development Company and Wuhan Jinhuang Construction Engineering Company, and wholly established a private equity fund, Gongqingcheng Zhufeng No. 2 Investment Management Partnership (Limited Partnership).

When the Golden Phoenix system gradually became large, the scam of fake gold had already been staged.

Capital crocodiles snipe the stock market

According to the trial information, Jia Zhihong defrauded the funds from 16 gold owners by playing fake gold scams, and the amount of funds used or whereabouts was used to pay 3.689 billion yuan for equity investment.

Jia Zhihong, who has not been able to realize his dream of landing on A-shares, entered the capital market in another way in 2016 and acquired listed companies twice.

This may be the main motivation for Jia Zhihong to use fake gold to defraud funds for acquisitions. The changes in the capital market also became the catalyst for the collapse of Jia Zhihong's Spring and Autumn dream, and finally exposed the trick of fake gold.

In June 2016, Wuhan Lianfuda Investment Management Co., Ltd. (hereinafter referred to as "Wuhan Fuda"), an affiliated company of Jinhuang Jewelry, quietly established a position and purchased a 10% stake in Hubei Wuchang Fish Co., Ltd. (hereinafter referred to as "Wuchang Fish", 600275.SH) for 200 million yuan. In the same month, Jinhuang Jewelry signed a loan agreement with Minsheng Trust, and the loan amount was exactly 200 million yuan (to be repaid in 2017).

According to Jinhuang Jewelry's announcement, in order to obtain a loan, it paid a so-called "loan start-up fee" of 5.3 million yuan to Minsheng Trust. In 2017, when Jinhuang Jewelry obtained financing from a number of trust companies such as Chang'an Trust with fake gold collateral, it also paid a "loan start-up fee".

In August 2016, Wuhan Lianfuda raised the Wuchang fish card for the second time. In the following month, Yichang Changjin Equity Investment Partnership (Limited Partnership) (hereinafter referred to as "Yichang Changjin"), which was established only in the same month, raised the Wuchang Fish (600275. SH）。

Yichang Changjin's shareholders include Jia Zhihong's Yantai Yingshuo Trading Co., Ltd. ("Yantai Yingshuo"), as well as its close partner Chang'an Trust, and its executive partner is represented by Cheng Wanli.

The two companies successively raised the Wuchang fish, which soon attracted the attention of the Shanghai Stock Exchange. During the market supervision, the Shanghai Stock Exchange found that Wuhan Lianfuda, which held 4.85% of Wuchang Fish at that time, was related to the accounts of 12 natural person shareholders, which was suspected of constituting a concerted action. Subsequently, the SSE sent a letter of inquiry to Wuchang Yu, asking it to verify whether there was a concerted action relationship between Yichang Changjin and Wuhan Lianfuda and its persons acting in concert.

On October 21, 2016, Wuchangyu disclosed in its reply to the inquiry letter that Wuhan Lianfuda claimed that its legal representative and major shareholder, Chen Wei, had worked for Jinhuang Jewelry in his early years, and had been friends with Jia Zhihong for many years, and still maintained a business cooperative relationship.

This is Jia Zhihong's name after the rejection of the IPO of Jinhuang Jewelry in 2008, and it has appeared in public again after eight years. Little did people know at the time that four years later his name would be associated with a shocking scam.

In the reply, Yichang Changjin told Wuchangyu that it intended to become the controlling shareholder of Wuchangyu by increasing its shareholding or other forms, seeking control of the listed company, so as to "carry out the operation of the combination of industry and finance" through Wuchangyu's capital market platform.

As of February 2017, the total shareholding ratio of Yichang Changjin and persons acting in concert has reached 17.87%. If its shareholding increase plan is fully completed, its shareholding ratio will further increase to 20.37%, which is only one step away from the position of the largest shareholder.

Since the Baowan controversy, the capital market has repeatedly staged the plot of "barbarians at the door". Like other listed companies that have been targeted, Huapu Industry, the largest shareholder of Wuchang Fish, also resolutely opposes the intrusion of Wuhan Lianfuda and Yichang Changjin, saying that its listing has interfered with the normal development rhythm of listed companies.

The inspection department of the China Securities Regulatory Commission also served a "Notice of Assistance in Investigation" to Wuchang Fish, pointing out that its relevant shareholders were suspected of violating laws and regulations and investigated them.

After being blocked by sniping Wuchangyu, Jia Zhihong had a new target.

In September 2016, the same month that Wuhan Lianfuda raised its Wuchang Fish brand, Hubei Sanhuan Group (hereinafter referred to as "Sanhuan Group"), the largest brand car dealer in Hubei Province, received approval for the introduction of a strategic investment and mixed reform plan. A year later (October 9, 2017), Sanhuan Group's capital increase and share expansion project was listed on the Wuhan Optics Valley United Equity Exchange, deleting the previous requirement that investors "belong to the automobile and auto parts manufacturing industry".

Subsequently, Jinhuang Group and Ningbo Huaxiang Group (002048. SZ) as intending investors, both submitted response documents.

On January 12, 2018, the restructuring plan of Sanhuan Group was obtained by the provincial government, and Jinhuang Group won the award, paying a total of 6.998 billion yuan in two installments through capital increase and equity transfer, and obtained 99.97% of the shares of Sanhuan Group. As a result, Sanhuan Group has become the first case of state-owned enterprises in Hubei Province reforming China's enterprises to private enterprises, and will bid farewell to the "SS" logo.

For Jia Zhihong, the acquisition of Sanhuan Group has once again established a connection with the capital market: through Sanhuan Group, he won its listed company, Xiangyang Automobile Bearing Co., Ltd. (hereinafter referred to as "Xiangyang Bearing", 000678.SZ), and became the actual controller of the listed company.

Ningbo Huaxiang Group, which was unsuccessful, believed that the reason for its defeat was unknown, and sent a "Letter of Challenge" to the Hubei Provincial State-owned Assets Supervision and Administration Commission and the Wuhan Optical Exchange.

On the other hand, the acquisition of Sanhuan Group by Jinhuang Group also attracted the attention of the Shenzhen Stock Exchange, and it sent a letter of inquiry to Xiangyang Bearing, asking it to explain the source of funds for the acquisition of Jinhuang Group.

According to the announcement issued by Xiangyang Bearing on January 29, 2018, the first batch of 2.8 billion yuan paid by Jinhuang Group, of which 2.4 billion yuan is its other receivables recovered in January 2018. As for the balance of 4.2 billion yuan, it will be financed through debt, with a borrowing ratio of 60%.

According to the relevant announcement, the total assets of Jinhuang Group in 2017 were only 13.071 billion yuan, and the asset-liability ratio was as high as 84.27%, and its refinancing space was quite limited.

At that time, Jia Zhihong said that the company had approached a large state-owned bank for an intentional financing arrangement of 4.2 billion yuan. However, apart from Hengfeng Bank, there is no such big state-owned bank involved.

Jia Zhihong's main owner is still the trust company, and fake gold has become collateral.

In addition to the fake gold, Jia Zhihong also pledged his shares in Jinhuang Jewelry and Yichang Xintong Cable Co., Ltd. to Dongguan Trust. In addition, Dongguan Trust also obtained 34.78% of the equity of Jinhuang Group, becoming its second largest shareholder, which is considered by Dongguan Trust to be a risk control measure for its trust financing.

In addition, Jinhuang Jewelry transferred all 99.99% of the shares held by Beijing Bohai Zhengqi Corporate Governance Core (Limited Partnership) to Chang'an Trust.

Although Jia Zhihong and Zhu Trust Company had set up a series of trust schemes, the balance of his payment to Sanhuan Group had not yet been made as of May 2019.

When Jia Zhihong was busy raising money everywhere, Sanhuan Group's mixed-use reform project made waves again. In June 2018, the restructuring of Sanhuan Group was suspended due to the problems of low evaluation and omission of evaluation. Zhang Junxiang, the legal representative of Hubei Zhonglian Asset Appraisal Co., Ltd. (hereinafter referred to as "Zhonglian Asset"), Huang Zheng, an asset appraiser, and Wu Yan, the project manager, who were the assets appraised by Sanhuan Group at that time, were criminally detained on suspicion of the crime of issuing material misrepresentations in supporting documents.

In March 2019, with the introduction of a new valuation firm, all of Sanhuan Group's assets and liabilities were re-evaluated. The following month, Peng Jianjun, member of the Party Committee and Secretary of the Discipline Inspection Commission of Sanhuan Group, and Shu Jian, Secretary of the Party Committee and Chairman of Sanhuan Group, were dismissed successively.

In May 2019, the People's Procuratorate of Qingshan District, Wuhan City, Hubei Province, alleged that under the intervention and instruction of relevant executives of Sanhuan Group, Zoomlion Asset deliberately omitted the evaluation of five parcels of land of Sanhuan Group, resulting in the appraised value of the project being artificially reduced from 2.080 billion yuan to 1.729 billion yuan.

In May 2019, Hengfeng Bank Yantai Huanshan Road Branch sued Jinhuang Jewelry to the Yantai Intermediate People's Court. The lid on the fake gold case is about to open.

At this time, the story of Wuchang fish also came to an end. In July 2019, Wuchang Fish announced that Wuhan Lianfuda had spent huge financial costs since it bought Wuchang Fish shares in 2016, and planned to reduce its holdings of Wuchang Fish shares due to its own capital needs. Yichang Changjin and Wuhan Lianfuda have dissolved the relationship between the concerted actors.

According to the announcement, since October 15, 2017, Yichang Changjin and Wuhan Lianfuda have not sent directors to Wuchang Fish, have not participated in the operation and management of listed companies, have not participated in shareholders' meetings on site, and have not actually exercised their shareholder rights. Wuchang fish has never really "swam" into Jia Zhihong's capital territory.

More clever deception will one day be exposed. The gears of fate will eventually wipe out all illusory bubbles.

Image: Internet

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