Only weeks after a court upheld the death sentence of Wu Ying, an once hugely wealthy businesswoman who was convicted of fundraising fraud -- another entrepreneur also from Zhejiang province has been detained, suspected of committing similar crime.
Dong Shunsheng [file photo]
Following the detaining of education tycoon Dong Shunsheng on Feb. 3 in the east China city of Wenzhou, an accounting firm, which is a third party in the case, has said Dong's company owed a whopping 4.5 billion yuan (714 million U.S. dollars) to over 7,000 private creditors.
The company had declared itself earlier that it owed 2.2 billion yuan to about 1,000 lenders.
Liren Education Group announced on Oct. 31 that it would stop repaying creditors and start asset restructuring.
The group based in Wenzhou's Taishun owns 36 schools and companies across the country. Its subsidiaries operate in several sectors including education, real estate and mining.
"GOD OF CREDIBILITY"
Everyone in the county of Taishun viewed Dong as a star who had greatly contributed to promoting local education, said an official with the county's education bureau.
Dong started his business in 1998 by renting a ceramics factory and turning it into a private high school.
The business later developed into a chain that has schools from kindergartens to high schools, all under the name "Yu Cai" which in Chinese means "create talents."
Dong invested massively in his schools, making them among the best in Taishun. Yucai schools have over 4,700 students and 1,000 faculty members.
Much of the investment came from private financing.
Though the schools' tuition fees were much higher than public schools, the company still operated in red in the first few years.
To cover the loss, Dong came up with other ways to make more profit. In 2003, he established the Liren Group and began expanding into the mining and real estate sectors, which again required enormous investment.
But the man was never late in repaying his loans, and consequently locals referred to him as the "God of Credibility."
People with extra cash rushed to loan money to Dong. Those without even borrowed money from family and friends, expecting to make a fortune by investing in Liren.