Tuesday, October 29, 2013

BREAKING NEWS: WCM777 CEO Zhi Liu Linked to Vantone Stock Scam in China

Sharp-eyed fellow Internet scambusters pointed me to clues that I discovered this article dated July 2012. That Ming Xu, and his buddy Liu Zhi was a part of the Vantone fraud in China. First, some background. 

Who is Tiger Zhi Liu? He said he's head of WCM777 

He's also US head of Vantone, according to his Linkedin Profile.

What you don't know is Vantone was a huge stock fraud out of China in 2012...

To give you a short summary... Vantone, or "万通" (pronounced WangTong) was a company in Shenyang China. Locally it enticed people to buy products at vastly inflated prices by giving away alleged "virgin stock" of the company, promising people who got these "virgin stock" that they will receive HUGE profits (fifty to one hundred times what they paid for) if they keep buying up more products... if the company is successful going public in the US of A. Company was later busted as a scam, selling a water purifier for 10 times the cost, making fraudulent promises, illegally offering stocks for sale, and more. 

And Zhi Liu is the head of Vantone USA, as shown above. 

Following is a line by line translation of 


沈阳警方侦破非法经营股票案 7省市3200余人受骗

ShenYang Police Solved the case of Illegal Stock Investment
7 provinces affected, 3200+ people cheated

2012-07-25 11:09:32

  法制网记者 周斌
Reported by LegalDaily China reporter Bin Zhao
Even today, all of the suspects had probably been arrested, resident of Liaoning Shenyang Jing Wong still can't quite believe that she had been scammed. "If Public Security only have waited... Maybe Vantone would have issued their stock, and my 'virgin stock' would have made me lots of money." She told the Legal Daily reporter. 
In the past nine years, retired worker Jing Wong had invested about 150 thousand to 160 thousand Yuan (RMB) into buy ShenYang Vantone International Holdings stock and products. Furthermore, at LiaoNing, Beijing, TianJing, HeiLongJiang and 7 other provinces and cities, there are over 3200 victims like Jing Wang who was fooled by a chance to invest in "virgin stock" of Vantone. Losses could total 200 million yuan (RMB).  
At this year National Public Security campaign to smash economic crimes, as commanded by Public Security, operated commended on May 4th (2012) where Public Security of 7 jurisdictions raided and completely dismantled this Vantone illegal stock crime network. The head, 7 officers, and dozens of sellers were all arrested. 

Temptation of Virgin Stock
Last November (2011) ShenYang Public Security received a tip from neighborhood militia that a company called "Vantone" (WangTong) is selling objects and giving away stocks. According to Chinese law, it is not legal to sell stocks without registration. Thus, police started investigation. 
Office Chu of ShenYang Public Security explained, "After detailed investigation, this company had hired many representatives in multiple provinces. They are selling nutraceuticals and water purifiers, with additional bait of 'giving away virgin stock'. Vantone claimed that if the IPO was successful the profit will be tens of times, perhaps hundred times profit. 
Chenping Zhu, 70 yrs old, told the LegalDaily reporter, that he was tempted by this "100 times profit" and became investor of Vantone, and put in at least 50000 Yuan (RMB). 
Zhu said, in 2003, a friend recommended her to buy virgin stock of Vantone, told her that if the stock is listed she'll make a lot of money back. However, to get the virgin stock, you have to buy the company products. If you buy 3 units to 13 units (at $558 Yuan RMB per unit) you can purchase virgin stock for $1 per share. If you buy 15 units to 21 units, they'll double your stock... Buy 10000, get 10000 free. The first 100 people every month to order 21 units or more gets 5000 extra shares. 
"The nutraceuticals are expensive. One box of supplement is $588, but I thought it'd be good for my body, and the key is the virgin stock. Why not?" Zhu said. So she spent 12000 Yuan (RMB) and bought 21 units, and got extra 5000 shares. 
After that, Vantone's reps keep coming back to Zhu, or organized "investor groups" from purchases. Sometimes they sayd Vantone is about to get listed, please buy more stock. Another time it's they need to show good sales to get the stock prices high, so buy more. They even said that if you don't buy the stock can't go public. With vast pressure and thought of profit Zhu bought another $10000 RMB of stock and 30000+ of various products. 
Zhu's purchases includes some special bed sheets, selenium tablets (supplements), vegetable sterilizer, special natural cooling pots, water purifier, etc. That water purifier costs 8000 Yuan. 
What sort of verbal sorcery did Vantone reps use to convince the public to pay these vastly inflated prices? One of the reps, YingChin Zhao, explained to the reporter. It doesn't matter what they buy, at whatever price, be it water purifier or cosmetics. They just want to make sure the stock offering goes through through sales. 
In the merchandise held by police as evidence, reporter found the water purifier. Looks just like a normal purifier  but there are a lot of piping at the bottom. Vantone claimed that this purifier can purify even ink and insecticide into drinkable water. 
Police explained to the reporter looking the purifier over, "There's nothing special. It's just a regular water purfiier. Vantone bought these from the South (of China) and put on their own label. Only cost them a few hundred yuan (RMB)". 
Many Layers of the Scam
In afternoon of July 3rd (2012), reporter followed police to YuSheng district, 195 ChungSang Road Sunshine Office Building, where Vantone is located on the 18th floor. 
The entire 18th floor is Vantone. That's several hundred square meters. We walked into the closed company. We can still see the various pictures of CEO Gang Hong posing with various dignitaries foreign and domestic on the walls near the front.  
In the past, Jing Wong and other victims had came here many times, and it was this impression that made them certain that Vantone will get listed. 
Some of the brochures left scattered on a desk explaiend that Vantone will register outside of China. In China there will be five different Vantone companies, including Vantone Health products, Vantone Microloans, and so on. 
Officer Chao of ShenYang Police explained, "Registering multiple companies is simply to look big. Vantone does not manufacture anything. All of their products are made by someone else. However, they have organized several board meetings, and invited a lot of foreign specialists to talk about the future of the company. It was really impressive, and really convinced a lot of victims. "

In the Vanton's marketing room, there are stacks of contracts. Apparently, Vantone made a lot of victims sign these labor contracts, so they can say they are "employed" by Vantone. "Vantone's virgin stock are given out to the employees and contractors", Gang Hong Yu said while behind bars. 
"He's trying to avoid the law. Contracts are signed after the people purchased the products or virgin stock", Office Chao explained, "Yu's scam is layers within layers. Victims were lead to really believe the company will be listing their stock and is growing stocker, which is why police never got any report until recently."
Before 2007, Yu's company is caleld DiJie, with stock offering. Years later, he purchased a shell company called Vantone International Holdings outside (of China), closed DiJie, converted DiJie stocks to Vantone stock, and continue to offer "virgin stock". 
In May 2009, Vantone was listed in OTCBB, with price of $0.20 USD (20 cents) with symbol of VNTI. Vantone then announced that they are listed, and they will get into NASDAQ very soon, and sold stocks at $10.5 RMB. 
Officer Chao explained further, "OTCBB can be checked through Internet (in China), and at first glance does look like regular stock market, and this is extremely misleading. This lead to further investor fever."
Police explained that OTCBB is just a price reporting system. Any company can get listed, no matter what their financials are, as long as they are registered properly. OCTBB listing is about the same as a company that's not listed on the "main board" (i.e. various Chinese stock exchanges). 
Police Defeat Evil and Protect Weak
Police found that of the 3200+ victims, any are seniors. They don't understand the financial market, and lack investment venues, and thus much of retirement savings and health savings are now gone. 
Even sadder revelation was when the reporter asked various victims do they have any record of these virgin stocks they purcahsed, they all said no. "Our virgin stock was all tallied by the distributor, Vantone should have records."
What's really demented is Vantone also operates a microloan business, that loans the money scammed from victims back out to the victims, with the threat of "canceling the virgin stocks already purchased" if they don't pay up, forcing many victims to sink further into debt by borrowing from friends and neighbors. 
Police revealed that this scam involved over 200 million RMB. Yu claiemd that Vantone profited about 100 million RMB. "Money was all used in operations."  Yu answered the reporter, with no further explanation. 
Officer Chu told the reporter, "He bought a commercial building and a Land Rover (NOTE: extremely expensive in China)". Vantone's officers can get over 10000 RMB per month. Some distributors drive BMW's. 
To bust this scam quickly, ShenYang police formed a special task force, as this is a huge operation involving plenty of people, plenty of jurisdictions, thousands of victims, and fraud within fraud. How and when to strike was the question faced by the police. 
Deputy Chief XiaoGang Wong explaiend that their goal is to prevent asset of the victims from dissipating, while preserving evidence and catch all suspects. 
On March 26, 2012, Police received word that head suspect Yu may be leaving the country. The task force decided to go ahead and start the raid, and arrested Yu at the airport, arrested 7 officers of the company, and attempted to follow all the assets of the company, and froze about 70 million RMB of Vantone assets. 
"When we cuffed Yu, he muttered 'I knew this would happen'" Office Chu said. 
"Because the police intervened in time, we were able to save a good percentage of victim's money," Deputy Chief Wong added. 
July 25th (2012) posted at LegalDaily China


Not convinced yet? Perhaps you say this does NOT involve Ming Xu? 

Ming Xu's own "child companies" CareuX listed Vantone as a SISTER COMPANY. 

And even today, Ming Xu is still using the Vantone name. Albeit, only in CHINESE. 

His "WCM", is known in Chinese as 美国万通投资银行, which literraly translates to  "US WangTong Investment Bank"  WangTong... Vantone. SAME THING. 

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  1. There are so many companys named "Vantone" chek this real state vantone company http://www.vantone.com/site/enIndex i think this is a common word for the asian people

    1. But none of them had the symbol VNTI on OTCBB.

      Vantone, which rhymes with Wangtong, is a popular "lucky" and "prosperous" Chinese name... One more reason why Mass Mutual picked it as its Chinese name... and for someone else to use that name possibly fraudulently.

  2. Do you have any more info on Tiger?