Re-trial verdict handed down in Junlian Company's alleged fundraising fraud case
Report by our staff (Reporter Liu Xiaoxing, Intern Wu Zhenpeng, Correspondent from Guangzhou Court Publicity Department) Yesterday morning, the Intermediate People's Court of Guangzhou delivered the re-trial verdict on the highly publicized case of Junlian Company, Zhang Junchuan and others accused of fundraising fraud and illegal public deposit-taking. The court ruled that the defendant company, Junlian Company, and seven defendants including Zhang Junchuan were guilty of illegally absorbing public deposits. Zhang Junchuan was sentenced to nine years in prison and fined 450,000 yuan; the other six defendants received sentences ranging from four to seven years in prison. Junlian Company was fined 8 million yuan.
Direct losses to investors amounted to 330 million yuan
Upon investigation by the Guangzhou Intermediate People's Court, it was found that in early 2003, Zhang Junchuan funded the establishment of Junlian Company, which was officially registered on July 6th of the same year with Zhang serving as its legal representative. The company’s business scope included research and development of computer software and hardware, anti-theft visual wireless electronic products, etc. After its establishment, Junlian Company set up an engineering department responsible for security-related businesses. Due to difficulties in profiting from these security businesses, Junlian Company, without approval from the People's Bank of China to raise funds from the public, exaggerated its asset scale, operating performance, listing prospects, and investment situations through advertisements and introductions by sales personnel. They promised the public an average annual return rate of about 25%, raising funds under various pretexts such as cash equity participation, investing in the Shanxi Coke Trading Center, purchasing Ping An Tower, borrowing from clients, collaborating on electronic installation projects, etc., signing one- or two-year 'Cooperation Agreements' and 'Repayment Plans' with the public to illegally absorb funds.
Most of the funds absorbed and returned by Junlian Company flowed through Zhang Junchuan's personal account. Upon obtaining the victims' money, the company allocated 25% for salesperson commissions, 25% for repaying principal and interest to victims, with the remaining funds partly used for related projects such as the Huacheng Mingzhu Industrial Park, Taiyuan Harbour Centre in Shanxi, Wangfu Building in Shanxi, and Ping An Tower.
According to judicial accounting appraisal, between February 2003 and April 2008, Junlian Company raised 484,659,696 yuan from 3,355 people, returning 106,359,919 yuan in principal to investors and allowing them to borrow 1,835,000 yuan. The company distributed 40,508,942 yuan in dividends to investors. From May 2006 to December 2007, salaries and commissions for the company's business managers and employees totaled 60,896,916.93 yuan. This resulted in direct losses amounting to 331,087,868 yuan for the investors. Statistics show that 473 people had recovered a total of 40,508,942 yuan of their investments, while 2,882 people had not fully recovered their investments, totaling 444,150,754 yuan.
The charge changed from fraud to illegal deposit-taking
In December 2009, the Guangzhou Intermediate People's Court sentenced Zhang Junchuan to 15 years in prison for fundraising fraud. Six key members of the company—Feng Zuojie, Lin Weibo, Sun Gang, Peng Yun, Jiang Haokai, and Xiao Zhiqun—were convicted of illegally absorbing public deposits and sentenced to terms ranging from three to nine years in prison, with fines imposed. Subsequently, the Guangdong Higher People's Court ruled that the original verdict was unclear in fact-finding and insufficient in evidence, ordering a retrial. During the retrial hearing in April this year, Zhang Junchuan admitted only to illegal deposit-taking and denied any fundraising fraud. He emphasized his optimism about the prospects of these projects and claimed that if it weren't for the case breaking out, he would have been able to repay both the principal and dividends to the investors.
Yesterday, the Guangzhou Intermediate People's Court found Zhang Junchuan guilty of illegal deposit-taking, sentencing him to nine years in prison and fining him 450,000 yuan. Feng Zuojie, Lin Weibo, Sun Gang, Peng Yun, Jiang Haokai, and Xiao Zhiqun were sentenced to terms ranging from seven to four years in prison, with fines imposed. The defendant entity, Guangzhou Junlian Telecommunication Technology Co., Ltd., was found guilty of illegally absorbing public deposits and fined 8 million yuan. Illegal gains from the defendant entity Junlian Company and all defendants will be confiscated and proportionally returned to the victims; if insufficient, further confiscation will continue until 331,087,868 yuan is reached. After the verdict, all defendants and representatives of Junlian Company calmly accepted the judgment and did not appeal.
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