In a shocking revelation, the once reputable “Sunset Red” retirement apartments in Hengyang, Hunan, which used to be a symbol of quality elderly care, turned out to be involved in an illegal fundraising scheme that defrauded 28 billion yuan (RMB) from 7,896 elderly individuals, leaving them penniless. This 14-year-long scam eventually caused a seismic shakeup in the officialdom, leading to the downfall of three civil affairs officials. They contested the verdict and revealed during the appeal process that half of the individuals engaging in illegal fundraising were city leaders. Recently, the second trial of this case was held in court.
On the morning of August 1st, Lu Yaqin, the former director of the Civil Affairs Bureau of Yanfeng District in Hengyang, along with her deputy Li Xiangrong and the director of the Bureau of Non-Governmental Organizations Management, Wang Runsheng, appeared in court for trial. Previously convicted of abuse of power, the three individuals appealed the verdict, leading to a retrial by the Hengyang Intermediate People’s Court.
In November 2019, Lu Yaqin and two others were held accountable for the Sunset Red retirement apartment’s illegal fundraising scandal, which involved a staggering 28 billion yuan. The retirement apartment, located in Wenchang Village, Yueping Town, Yanfeng District of Hengyang City, received approval for construction in November 2005. Initially touted as an investment project, the first phase of the Sunset Red apartments was allocated 35 acres of land, construction commenced in March 2006, and a year later, 16 residential buildings with 960 beds for the elderly were completed, accommodating up to 1,000 elderly residents. Subsequently, they acquired additional allocated land.
With its superior accommodation conditions and surroundings, Sunset Red apartments attracted numerous retirees from party and government institutions in Hengyang or their family members to reside or invest, becoming a renowned symbol of elderly care in the local area.
However, in November 2019, the Hengyang Intermediate People’s Court ruled that since its establishment in 2005, Li Xinhui, the actual controller of the apartments, along with his wife Quan Jun and others, had used Sunset Red apartments as a front to lure the public into signing “residential contracts” using retirement and investment as bait, promising high interest rates or returns, thereby amassing over 28 billion yuan through illegal fundraising. At least 875 million yuan of the funds could not be returned to the Sunset Red investors. This illegal fundraising scheme affected 7,896 elderly individuals, leaving their retirement funds vanished. The case sparked widespread attention and strong reactions in society.
The Sunset Red retirement apartment’s illegal fundraising scandal in November 2019 sent shockwaves across Hengyang, leading to a significant official cleanse.
On March 17, 2022, Lu Yaqin, then a standing committee member of the Yanfeng District Committee and the propaganda department director, was detained for investigation in her office. From engaging in illegal fundraising since the opening of the Sunset Red apartments in 2005 to the explosion of the scandal in November 2019, the Civil Affairs Bureau of Yanfeng District had five different bureau directors, with Lu Yaqin taking over as the bureau director in November 2015. During this period, she was promoted to Deputy District Chief of Yanfeng District and later became a standing committee member and propaganda department director.
Alongside Lu Yaqin, Li Xiangrong, the deputy director of the Civil Affairs Bureau of Yanfeng District, and Wang Runsheng, the director of the Civil Affairs Bureau’s Non-Governmental Organization Service Center, were also under investigation. Deng Guilan, the head of the Civil Affairs Bureau’s Fu Ci Stock (later renamed Retirement Stock).
The Hengyang Zhengxiang District Prosecutor’s Office accused Lu Yaqin, Li Xiangrong, and Wang Runsheng of knowingly neglecting their responsibilities as the industry regulatory department of the Sunset Red apartments, allowing illegal fundraising activities to persist. Between November 2015 and November 2019, the Sunset Red apartments engaged in illegal fundraising amounting to over 1.538 billion yuan, resulting in economic losses of over 185 million yuan.
In the first trial, the court found the three individuals guilty of abuse of power and sentenced them to five years in prison. Li Xiangrong was also found guilty of accepting bribes totaling 710,000 yuan, constituting bribery, and was sentenced to seven years in prison for the combined offenses.
However, the trio contested the verdict and filed an appeal.
On the morning of August 1st this year, the highly anticipated retrial began in court. The entire courtroom process was intense.
During the full-day retrial, Lu Yaqin defended herself, claiming innocence, stating that the illegal fundraising activities at Sunset Red did not occur during her tenure nor did the scandal explode at that time.
At the time of the incident, Lu Yaqin was a standing committee member and propaganda department director of Yanfeng District. During the courtroom session, she mentioned that the illegal fundraising at Sunset Red had been ongoing for over ten years, involving numerous public officials and their relatives who reaped significant returns. She also acknowledged the pervasive influence of Li Xinhui, the controller of the apartment, and being in a networked relationship due to his prolonged infiltration.
During the August 1st trial, one of Lu Yaqin’s defense attorneys was her husband, Zhang Muxing. In her final statement, Lu Yaqin highlighted that apart from hiring retired leadership officials at Sunset Red, Li Xinhui continuously penetrated relationships with various sectors of society, especially key departments’ leadership. She further disclosed that “half of those involved in fundraising at Sunset Red were relatives of city leaders or public officials, many of whom received substantial returns.”
The verdict for this case is pending.