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Businessman Xiao receives sentence for illegal activities

By Cao Chen in Shanghai | | Updated: 2022-08-19 21:08
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Businessman Xiao Jianhua was sentenced to 13 years in prison and fined 6.5 million yuan ($954,200) for illegal absorption of public deposits, breach of entrusted property, illegal use of funds as well as bribery, Shanghai No 1 Intermediate People's Court announced the verdict on Friday.

Xiao's company Tomorrow Holdings Co, was facing a fine of 55.03 billion yuan, according to the court.

The court said that Xiao and Tomorrow Holdings had severely violated financial management order, State financial security and the integrity of public servants. Given he surrendered himself, pleaded guilty and cooperated to restore damages, Xiao and his company were given a lenient punishment in accordance with the law, the court announced.

According to the court, the Tomorrow Holdings was established in 1999 and Xiao is the company's actual controller. Xiao and his company have taken control of a number of financial institutions through decentralizing equity and other illegal approaches since 2004.

From 2010 to 2017, the institutions illegally absorbed funds worth 311.6 billion yuan from the public through providing trust, investment insurance and wealth management products beyond sales scale.

Manipulated by Tomorrow Holdings and Xiao, the Baoshang Bank didn't exam and verify the company's fraud financing schemes from July 2012 to Jan 2017. From Nov 2013 to Jan 2017, the company and Xiao manipulated Hua Insurance and other financing and insurance institutions to avoid substantive examinations over the fraud financing schemes of Tomorrow Holdings. In addition, through the purchase of trust and asset management plans, the institutions transferred the property of their clients, such as deposits and entrusted assets, to Tomorrow Holdings, which totaled over 339.5 billion yuan.

The illegal gains are mainly used by Tomorrow Holdings for the acquisition of financial institutions, securities transactions and overseas investments. Part of the illegal gains have been returned so far, the court said.

Moreover, Xiao and the company bribed civil servants with shares, real estate, cash and other property from 2001 to 2021, amounting over 680 million yuan.

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