The 30 billion Chengxing fraud case has received a new verdict. The reporter learned that the Shanghai Financial Court recently made a first instance judgment, stating that companies related to "Chengxing Series" were ordered to pay 3.41 billion yuan and bear related expenses to Shanghai Gefei Asset Management Co., Ltd. (hereinafter referred to as "Shanghai Gefei"), a subsidiary of Noah. However, due to the lack of basis, the Shanghai Financial Court does not support the lawsuit request of JD Trading (hereinafter referred to as "JD Company").
At present, the case is still in the appeal period, and the first instance judgment has not yet taken effect. A court insider told the International Financial News reporter, "From the perspective of the court, the case has not taken effect, and the publication of the judgment is illogical. It should not be the judgment disclosed by the court. Currently, it seems that the case (judgment) may not take effect."
The cause of this case was from February 2015 to June 2019, when Chengxing Company used its supply chain trade background in procurement business with JD.com and Suning Company to finance through accounts receivable transfer and repurchase. During the financing process, Luo Jing, the actual controller of Chengxing Company, arranged for Chengxing Company to fabricate its accounts receivable to JD Company and Suning Company, and signed accounts receivable debt transfer and repurchase contracts, factoring contracts, etc. with Xiangcai Securities, Moshan Factoring, Shanghai Gefei Company under Noah Company, Yunnan Trust, and Anhui Zhongxin.
Employees of Chengxing Company defrauded the above-mentioned institutions of more than 30 billion yuan by impersonating employees of JD and Suning Company with forged work cards, conducting interviews, handing over materials, and signing contracts with the aforementioned institutions. They also intercepted the transfer of creditor's rights and mail materials, opened accounts to impersonate JD Company's accounts, and collected payments. As of the incident, the total losses amounted to more than 8.8 billion yuan, including losses of over 900 million yuan for Xiangcai Securities, over 2.7 billion yuan for Moshan Factoring, over 1.5 billion yuan for Yunnan Trust, over 3.4 billion yuan for Shanghai Gefei, and 99 million yuan for Anhui Zhongxin.
Shanghai Gefei's loss of over 3.4 billion yuan mainly comes from its initiated establishment of the "Genesis Core Enterprise Series Private Equity Fund". The reason why Noah Company was deceived and lost over 3.4 billion yuan is related to the bribery of Fang, who was assigned to participate in the business of Chengxing Company. According to two criminal judgments obtained by reporters from the International Financial News, Luo Jing, the actual controller of Chengxing Company, instructed employee Luo to repeatedly bribe Mr. Fang of Noah Company. Mr. Fang took advantage of his position in participating in the project initiation and promotion of the establishment of the business to illegally accept bribes from Mr. Luo multiple times, totaling more than HKD 3 million, equivalent to more than RMB 2 million.
In the end, Luo Jing was sentenced to life imprisonment, deprived of political rights for life, and fined RMB 20.1 million in the first instance by the Shanghai Second Intermediate People's Court for committing contract fraud and bribery against non-state workers. Fang was sentenced to 3 years imprisonment and fined RMB 100000 by the Yangpu District People's Court in Shanghai for the crime of accepting bribes as a non-state employee. The stolen funds withdrawn or confiscated were confiscated.
Two "Chengxing Series" companies were awarded a compensation of 3.4 billion yuan
On November 24th last year, a contract dispute between Shanghai Gefei, a subsidiary of Noah Company, and Guangdong Chengxing Holdings Group Co., Ltd., Guangdong Zhongcheng Industrial Holdings Co., Ltd. (hereinafter referred to as the two "Chengxing" companies), Suzhou Shengjun Marketing Management Co., Ltd. (hereinafter referred to as "Suzhou Shengjun"), and Beijing JD Century Trading Co., Ltd. (hereinafter referred to as "JD Company") was heard in the Shanghai Financial Court.
At that time, the case received much attention due to a statement from JD.com. In its statement, JD.com accused Noah of maliciously suing and misleading investors and the public, attempting to shift responsibility and find a scapegoat for itself. Noah Company subsequently issued a statement stating that JD has infringed on its reputation and will take legal measures. "JD can present specific evidence of its' 100% gun lying 'to the court in a legal and compliant manner.".
On May 7th, the Shanghai Financial Court held another court hearing to hear the factoring contract dispute case between Shanghai Gefei and Shanghai Ziyan Auto Rental Service Co., Ltd. (formerly known as Noah (Shanghai) Financial Leasing Co., Ltd., hereinafter referred to as "Ziyan Leasing") under Noah Company against JD.com, two "Chengxing Series" companies, and Suzhou Shengjun and other companies, and made a judgment. The court supports the civil claims of Shanghai Gefei and Self proclaimed Leasing against the two "Chengxing" companies, but it constitutes "infringement compensation liability" against Shanghai Gefei and Self proclaimed Leasing's JD company, which was not supported by the court due to "lack of basis".
According to the first instance judgment, the Shanghai Financial Court ordered two "Chengxing series" companies to pay Shanghai Gefei the outstanding amount of Chengxing's accounts receivable of RMB 3.41 billion, and the related legal fees and expenses incurred by Shanghai Gefei were RMB 3.6 million. The two "Chengxing series" companies paid a repurchase of accounts receivable of RMB 85 million to self leasing. In addition, the two "Chengxing" companies were ordered to bear the costs and expenses incurred by the Shanghai Financial Court of 17.1 million yuan.
The Shanghai Financial Court believes that self proclaimed leasing can claim compensation from JD Company for its economic losses on the grounds of infringement, but whether its claim can be established should be analyzed based on the elements of infringement liability. The self proclaimed leasing claim that JD.com did not fulfill basic care obligations in employee management, office space management, email sending and receiving mechanism, financial invoice management, POP business management, and other aspects resulted in insufficient evidence for its losses, which the court did not support.
On May 8th, Noah Company announced on the Hong Kong Stock Exchange that on May 6th, 2024, Noah received a judgment in the civil case of Chengxing. In the judgment, Shanghai Gefei's other claims against the co defendants were rejected by the Shanghai Financial Court. The judgment of the Shanghai Financial Court will take effect after the end of the appeal period. Noah will continue to closely monitor and evaluate any future developments in legal proceedings related to Chengxing, and notify investors of any updated information (if applicable) in a timely manner. Noah will also continue to take the best action to promote the enforcement of the judgment to the maximum extent permitted by law and protect the interests of investors in Chengxing Debt Fund.
Multiple people convicted in the "30 billion fraud case"
The 30 billion Chengxing fraud case can be traced back to 2015. From February 2015 to June 2019, Chengxing series companies successively engaged in supply chain trade with Suning Company and Beijing JD Century Trading Co., Ltd. JD Company, financing through accounts receivable transfer and repurchase. At the same time, under the arrangement of its actual controllers Luo Jing and Luo, Chengxing Company used its supply chain trade background with JD and Suning Company, and had Luo privately engrave the seals of JD and Suning Company. Liang, Feng, Liu and others provided forged materials for purchase and sale financing, fabricated accounts receivable, and signed accounts receivable transfer and repurchase agreements with Xiangcai Securities, Shanghai Moshan Commercial Factoring Co., Ltd. (hereinafter referred to as "Moshan Factoring"), Shanghai Gefei and other companies under Noah Company, Yunnan Trust, Anhui Zhongxin Financial Investment Group Co., Ltd. (hereinafter referred to as "Anhui Zhongxin"), and others. Waiting for the contract, and with the cooperation of Shi, Wang, Zhao, Liu, and others, adopting fake identities as employees of JD.com and Suning Interception and forgery of accounts receivable debt confirmation documents and other means to make the above-mentioned institutions believe the fictitious accounts receivable as true, in order to deceive financing funds.
Due to continuous losses in supply chain trade financing, Chengxing series companies continue to fraudulently obtain financing from the aforementioned institutions in the face of insolvency. The proceeds are used to repay the principal and interest of past financing projects and bank loans, as well as to pay various expenses. As of the time of the incident, more than RMB 30 billion was fraudulently obtained from Xiangcai Securities, Moshan Factoring, Shanghai Gefei, Yunnan Trust, and Anhui Zhongxin, resulting in a total economic loss of over RMB 8.8 billion for the aforementioned institutions.
Noah Company was deceived and lost over 3.4 billion yuan, which is related to the bribery of its employee Fang, who was assigned to participate in the business. It is reported that since September 2016, Shanghai Gefei has been engaged in accounts receivable debt transfer and repurchase financing business with Zhongcheng Company and Chengxing Company. Mr. Fang was appointed by Noah Zhengxing Fund Sales Co., Ltd., a subsidiary of Noah Company, to participate in the above-mentioned business of Shanghai Gefei and two "Chengxing series" companies. In order to expand the financing scale and accelerate the progress of financing business processing, Luo Jing, the actual operator of Zhongcheng Company and Chengxing Company, instructed employee Luo to repeatedly bribe Fang. Mr. Fang took advantage of his position in participating in the project initiation and promotion of the establishment of the business to illegally accept bribes from Mr. Luo multiple times, totaling more than HKD 3 million, equivalent to more than RMB 2 million.
According to the Criminal Judgment of Yangpu District People's Court in Shanghai [(2020) Hu 0110 Xing Chu 690], Fang was criminally detained on June 21, 2019 on suspicion of committing contract fraud. He was arrested on July 26 of the same year on suspicion of bribery by non-state employees. On June 21, 2019, Fang voluntarily surrendered to the Yangpu Branch of the Shanghai Public Security Bureau. In July of the same year, Fang withdrew a total of RMB 1.41 million from the Yangpu Branch of the Shanghai Public Security Bureau through his friend. During the trial, Fang withdrew all the stolen funds.
The People's Court of Yangpu District, Shanghai believes that Fang is a staff member of a financial institution who, taking advantage of his position, illegally accepts other people's property and seeks benefits for others in financial business activities. The amount involved is huge, and his behavior has constituted the crime of bribery for non-state employees. Taking into account the amount, circumstances, and consequences of the crime in this case, Fang was sentenced to three years in prison and fined RMB 100000. The stolen funds withdrawn or confiscated were confiscated.
According to the Criminal Judgment of the Second Intermediate People's Court of Shanghai [(2020) Hu 02 Xing Chu 83], Luo Jing was convicted of contract fraud, sentenced to life imprisonment, deprived of political rights for life, and fined RMB 20 million; Convicted of the crime of bribery against non-state workers, sentenced to 3 years in prison and fined RMB 100000, decided to execute life imprisonment, deprived of political rights for life, and fined RMB 20.1 million.