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Illegal fundraising jeopardizes vital interests of the people, destroys the economic and financial norms, and threatens the social stability. The Postal Savings Bank of China (PSBC) solemnly reminds you to stay away from illegal fundraising and keep your wallet safe!
I. Characteristics of illegal fundraising
According to the Interpretation of the Supreme People’s Court of Several Issues on the Specific Application of Law in the Handling of Criminal Cases about Illegal Fundraising, illegal fundraising is the behavior of raising funds from the general public (including entities and individuals) in violation of the provisions of the state laws on financial management. Illegal fundraising shall concurrently meet the following four conditions, illegality, openness, luring by promise of gain and sociality. To be more specific, it means to raise funds without the legal approval of the relevant department or under the disguise of lawful business operations, to promote openly to the general public by means of media, presentations, leaflets or text messaging, etc., to promise to repay the principal and interests or make payments in cash, in kind, equities, etc. within a certain timeframe, and absorb funds from the general public, i.e. not targeted at certain type of people.
II. Harm of illegal fundraising
Criminals who illegally raise funds through deceptive means usually squander, waste, transfer or illegally retain the funds, making it very difficult for the deceived to recover their funds. In addition, illegal fundraising seriously interferes with the economic and financial order and is highly likely to cause social risks. According to China’s laws and regulations, illegal fundraising is not protected by law, and people who participate in illegal fundraising shall undertake risks on their own!
III. Legal liabilities of illegal fundraisers
The Criminal Law of China stipulates that whoever commits the crime of illegally absorbing public savings shall be sentenced to fixed-term imprisonment or detention of no more than three years and shall also be fined, additionally or exclusively, a sum no less than RMB20,000 but no more than RMB200,000; in case of huge amount or other severe circumstances, the criminal shall be sentenced to fixed-term imprisonment of no less than three years but no more than ten years and shall also be fined no less than RMB50,000 but no more than RMB500,000. Whoever commits the crime of fraud fundraising shall be sentenced to fixed-term imprisonment or detention of no more than five years and shall also be fined no less than RMB20,000 but no more than RMB200,000; in the case of huge amount or other serious circumstances, the criminal shall be sentenced to fixed-term imprisonment of no less than five years but no more than ten years and shall also be fined no less than RMB50,000 but no more than RMB500,000; in the case of especially huge amount or other particularly severe circumstances, the criminal shall be sentenced to fixed-term imprisonment of no less than 10 years or life imprisonment and shall also be fined no less than RMB50,000 but no more than RMB500,000 or confiscation of property.
VI. Common means of illegal fundraising
The first is to promise high returns. Lawbreakers tell lies like “pennies from the heaven” and “becoming rich overnight” and promise high returns to investors. In order to induce more people, illegal fundraisers often pay the promised principal and interest in full amount on time at the initial stage of fundraising. However, after the fund raised reaches a certain volume, they secretly transfer the fund or abscond with the money, causing financial losses to the participants.
The second is to fabricate fraudulent projects. Most lawbreakers fabricate all kinds of fraudulent projects through registration of legal companies or enterprises under the disguise of responding to national industrial policies and carrying out entrepreneurship and innovation. Some even organize free tours and inspections to gain people’s trust.
The third is to build up the momentum through false publicity. Lawbreakers often spend lavishly on publicity, hiring celebrities for endorsements, advertising on radio, television and Internet media, publishing exclusive interviews on well-known newspapers and magazines, hiring people to hand out leaflets, and organizing social donations to create misleading impression.
The fourth is to inveigle through family ties. In order to complete or improve their performance results, some people involved in illegal fund raising similar to pyramid schemes do not hesitate to exploit their family ties and geographical relationships. They make up lies about obtaining high returns to hook in their relatives, friends, classmates or neighbors. As a result, the participants grow like weeds and the scale of fundraising expands continuously.
PSBC reminds you to purchase financial products of wealth management, fund, insurance, etc. through proper channels such as banks, and not to readily believe in the so-called “wealth management” of high interest rates, not to be moved by small gifts, not to accept bait such as “returning interest first”. Protect your personal information, follow the advertisement of banking and insurance released by formal institutions as well as risk reminders against illegal fundraising. Timely report and make complaints when encountering or getting involved in illegal fundraising. Stay vigilant against “wealth management” and “insurance” products under the following circumstances:
i. Under the disguise of “viewing advertisements to earn extra money” and “consumption rebates”;
ii. Under the disguise of overseas investment in equities, options, foreign exchange, precious metal, etc.;
iii. Under the disguise of investing in the elderly care industry to obtain high returns or elderly care free of charge;
iv. Under the disguise of making equity investment by private placement or partnership, without industrial and commercial registration;
v. Under the disguise of investing in virtual currency, block chain, etc.;
vi. Under the disguise of “poverty alleviation”, “mutual aid”, “charity”, etc.;
vii. Distributing advertising leaflets on streets, in shopping malls, supermarkets, etc.;
viii. Attracting elderly people through organizing inspections, tours, lectures, etc.;
ix. Under the disguise of overseas “investment and wealth management” companies, websites, servers, etc.;
x. Requiring payment of investment funds in cash or to individual accounts and overseas accounts.