A Chinese woman who masterminded a $70 million Ponzi
scheme has been sentenced
to death by a Chinese court - possibly by firing squad. Haiyan Lin, 39, from
the Wenzhou province, received the sentence as part of a broader push by
Chinese authorities to crack down on the underground lending industry that has
found itself awash with cash as part of Chinese stimulus efforts. Haiyan is the
latest of several women who have received a death sentence for their role in
According to Chinese authorities, Lin began soliciting
funds in 2007, telling friends, former classmates, and family members that
she could deliver high returns with little risk. While evidence suggests that
her business began as a legitimate venture, she soon began to encounter heavy
losses as a result of investing in multiple high-risk investments, including
futures and speculative stocks. Lin eventually collected approximately $70
million from investors.
However, instead of disclosing her mounting losses to
investors, Lin instead continued to solicit new investments. In turn, Lin used
funds from these newly-solicited investments to make payments to existing
investors - a textbook example of a Ponzi scheme. The scheme eventually collapsed
in October 2011.
China differs from the United States in that it allows
the imposition of the death penalty for nearly sixty offenses, including fraud
and economic crimes. By contrast, the United States allows only a handful of
offenses to qualify for the death penalty. This results in one of the highest
amounts of executions annually, with it estimated that China executed
approximately 4,000 prisoners in 2011. This has also included death sentences
for women accused of Ponzi schemes, including Wang Caiping, was sentenced to
death last year after an investment fraud that racked up losses of nearly $20
million through risky futures and gold trading.
However, Chinese courts allow the commutation of a death
penalty to life in prison after serving two years of the sentence, which was
recently seen in the case of Wu Ying. Ying, who had been sentenced to death for
a $60 million Ponzi scheme, had her sentence commuted to
a life sentence in May 2012.
For more news and analysis of Ponzi schemes, visit
Ponzitracker, a blog by Jordan Maglich, an attorney at Wiand Guerra King P.L.
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