On June 27, the three executives of the Liaoning Dalian “Shanhai Group,” Zhou Zhifeng, Wang Changdong, and Lu Hong, whose core business is the elderly care industry, were sentenced to life imprisonment, 16 years, and 14 years respectively for the crimes of illegal fundraising and money laundering, with the amount involved totaling 24.419 billion yuan.
According to the Liaoning Province Dalian Intermediate People’s Court, Zhou Zhifeng, Wang Changdong, and Lu Hong, without the approval of the national financial regulatory authorities, used the name of the “Shanhai Group” to illegally fundraise from the public through activities like organizing tours, offering high interest rates as bait, and openly conducting fraudulent propaganda. From September 1, 2015, to August 11, 2023, they fraudulently collected over 24.419 billion yuan from investors. To conceal the source and nature of the proceeds from the fundraising fraud, Zhou Zhifeng and Wang Changdong used the illicit funds for money laundering activities like purchasing stocks.
The main offender, Zhou Zhifeng, was sentenced to life imprisonment, deprived of political rights for life, and had all personal assets confiscated. The other two were sentenced to 16 and 14 years in prison, respectively, along with fines.
Public information reveals that the Shanhai Group, formally known as Dalian Shanhai Hui Development (Group) Co., Ltd., was established in 2005. Its controlled enterprises include several companies such as Dalian Shanhai Trading Co., Ltd., Dalian Fuhui International Travel Agency Co., Ltd., Liaoning Shanhai Hui Danyaofang Chain Co., Ltd., Dalian Shanhai Hui Xiyanhong International Travel Agency Co., Ltd., and Dalian Shanhai Hui Yiyao Chain Co., Ltd.
According to a previous article by the author of Netease’s account “Xiaochong Jiating,” the Shanhai Group was essentially a Ponzi scheme. The company primarily operated by using investment returns to attract new investors, paying interest and short-term returns to old investors with money from new investors, creating a false impression of profit to deceive more people into investing. When the new investors’ funds were insufficient to cover the returns owed to old investors, the financial chain broke.
Ultimately, from 2022 to 2023, the Shanhai Company continuously delayed paying employee salaries, defaulted on debts, and construction payments, failing to fulfill investments for the elderly, exposing their fraudulent fundraising activities over the years. In August 2023, Shanhai Group’s actual controllers, including Zhou Zhifeng, were subjected to criminal coercive measures, leading to their arrest in October 2023.
According to the article, the Shanhai Group claimed to have over 300 travel companies nationwide with more than 500,000 travel club members. The Shanhai Group fundraising fraud case, done under the guise of elderly care and tourism, is the largest of its kind in China. It not only affected many people in Dalian but also deceived individuals in various parts of the country.
The article highlights that during the fraud scheme, there were cases of relatives deceiving one another, classmates deceiving classmates, and neighbors deceiving neighbors. However, most victims were induced to join through brainwashing lectures and activities.
According to informed netizens, “Most of the victims were retirees over 60 years old.” Some shared stories of individuals being deceived by the Shanhai Group, with losses ranging from four hundred thousand to nine hundred thousand yuan. Another comment indicated, “The impact of the Shanhai Group incident on society is significant. I heard that many elderly people were swindled and lost everything.”
Following the verdict, the case sparked heated discussions online, with many questioning, “Why wasn’t the death penalty imposed?” Some criticized, “How many families were ruined, and they only get life imprisonment?” Others raised concerns about the supervision, asking, “How did they manage to deceive for eight years without being caught?”