Tuesday, May 17, 2016

BREAKING NEWS: WCM777 smashed AGAIN in China, is Phil Ming Xu in custody?

PatrickPretty.com spotted a news in ShanghaiDaily that a Mr. Xu of "World Capital Market" was arrested by Chinese police for pyramid scheme in China. It appears that Phil Ming Xu of WCM777 has moved back to China and restarted his scam which collapsed in 2014 in the US. Below is a bilingual version of the news, with English version provided by me.


会员遍布28省 涉案金额数亿
Members spread across 28 provinces, amount into hundreds of millions

Wantong Miracle suspected of illegal securities, being investigated

发布时间:2016-05-15 20:42 星期日   来源:法制日报——法制网
Posted: May 15 2016 Sunday 20:42     Source: LegalDaily.com,cn

法制网记者 李想  Reporting for LegalDaily Xiang Li


On May 27, 2015, Ms. Zhou Hua (pseudonym) who resided in Guandong, reported to the local Police Economic Crime Detachment to report that she had been defrauded. The frustrated Ms. Zhou told police that she trusted others and invested in "Wantong Miracle Social Capital Cloud Computing Platform", and not only did not get any promised profit, the 26000 investment is "gone with the wind".


Police followed the leads, and revealed this humongous illegal securities crime syndicate that used various new concepts such as "protoshare money management", "e-commerce" to disguise itself. Based on investigation, this crime involved over 5800 Wantong Card members, spread across 28 different provinces (in China), involving hundreds of millions in RMB

A exquisite facade to deceive the masses


According to police, in January 2014, Ms. Zhou believed suspects Mr. Liang and Mr. Chen, and purchased two of the Wantong Miracle "WCM705" suite at cost of $1999 each. Based on the then published rate of 6.5 RMB to 1 dollar that's about 13000 RMB. This would give the investor 1999 "points". According to the then promises, she can get 16 USD every day as profit share, and can do it 100 times. 


Legal Daily reporter searched the Internet about "Wantong Miracle", and found there were many people asking online is Wantong Miracle" legal. So what sort of company is Wantong Miracle? 


May 6th (2016), in Shenzhen 2nd detention center, reporter met the suspect Mr. Xu, who had been arrested. Mr. Xu claimed, after graduating from university he worked as producer in media, then transferred to finance. 


According to Zhang Zhaohui, deputy chief, economic investigation detachment, Zhaoqing Public Security, Wantong Miracle's various products was introduced to China in May 2013, by a Mr. Xu (supposedly some "investment bank holding group CEO") and others. Xu, et al, claimed that "Wantong Miracle" is a social capital revolution, using Internet, cloud computing, and world retail discount system, to provide "capital magnification" to global customers. 

Fancy names, upgraded crimes


By the end of 2013, Wantong miracle, due to sales of all these suites previously, is bleeding cash profusely. Xu, in attempting to prevent the money from leaving the system, added various restrictions such as limiting withdrawal amounts, delayed cashout terms, introduced "repurchase permits" and other methods to limit and delay members from cashing out. 

    2014年3月,徐某等人以“万通奇迹”系列套装已由Global Unity财团接手,现有“万通奇迹”系列套装项目进行修改为借口,推出百人网股权置换(即电子积分兑换百人网原始股权)、国度交易所(会员之间相互买卖电子积分,即老会员可以将电子积分通过交易所平台出售给新会员后,由新会员直接汇款给老会员,变相达到提现的目的),用以消耗会员的电子积分,达到拖延会员提现时间和赚取电子积分交易手续费的目的。2014年7月,徐某等人再以引进新财团香港爱城集团有限公司,需新旧服务器转接、数据整合为借口,暂停会员提现。

In March 2014, Xu, et al, claimed that "Wantong Miracle" suites had been taken over by "Global Unity" group, and all the Wantong Suites E-Points are to be converted to "HundredNet protoshares". A trading platform is also introduced (so older members can "sell off" their points to new members, thus allowing them to cash out) in order to use up the accumulated E-Points, both to delay the members from cashing and to charge "trading fees". In July 2014, Xu, et al, again used the excuse of adding an investor group from Hong Kong AiChen ("Love City"), and need to switch servers, to suspend payouts. 


In January 2015, Xu, at al, recruited Xu's father (Mr. Xu Sr.) and a cousin (Mr. Tong) to open WangYiTong in Shenzhen, China. They claimed that a "Kingdom Financial Holding Group" is willing to accept the old Wantong Point, and solicited Wantong members for additional funds "activation fee" to the rate of E-Points * 0.20 * 6.3, and the Wantong members can join the Kingdom system and get the new LoveCoins, and Kingdom will refund E-Points * 0.20 * 6. Basically the company earned 0.3 RMB per E-point to "convert" Wantong members over to Kingdom members and switch from Wantong E-Points to LoveCoins. 


From July 2015 until now, Xu, et. al, established Kingdom Financial Holding, HundredNet Technology, Love Multiplies Broadcast, and a dozen other shell companies with no actual operations. They then used websites, Weibo (Chinese Twitter), SMS/WeChat, QT voice chat room, Podcasts, Press Releases, and other methods to advertise that Kingdom Financial Holding will soon go IPO, and claimed all 14 companies will IPO in the next 3 to 24 months, to deceive the public into purchasing "protoshare" securities of these shell companies. 

Illegal Securities Cannot Escape Justice


The reporter at Shenzhen Public Security was able to learn that Wantong Miracle and other companies is not a financial firm or a bank, and has no license to sell securities and take in investments, not shares, not bonds, and even their "AiBi (LoveCoin)" is not a true currency. 

    经查, 2015年5月至9月,万怡通公司账户汇款备注为“激活金币” “激活万通卡” “购买爱币“的汇款金额1.2亿余元,赚取激活费用900余万元,按照20%激活款估算,涉案金额达数亿元人民币。

Based on investigations, from May to September 2015, Wanyitong companies received hundreds of millions of RMB to "convert" Wantong E-Points into Kingdom Points or the LoveCoins, and earned 9 million in fees. Assuming 20% conversion, the scam involved HUNDREDS of millions of RMB. 


Reporter has learned from the economic investigation detachment that the funds received by Wanyitong supposedly for activation was not used in operation, and in fact, is in the process of being moved elsewhere. Furthermore, the amount of money involved is in no way sufficient to pay out the return advertised. 


Zhang said that Xu, et all promised fixed profit share with the shell company Wanyitong, claimed to be "reimbursing Wantong members", promised all sorts of returns to be paid in invalid currency (LoveCoins) and protoshares, through Internet, and is being suspected of selling illegal securities. 


The new economic crime such as Wantong Miracle seem to highlight an aspect that it entices people to invest in a cryptocurrecy but in reality is illegal securities. How can people see through the facade in the age of various cryptocurrencies and promised huge profits? 


Zhang said everybody should have a sense of self-preservation. "There is no free lunch". There are a lot of supposed Internet finance that are totally bogus. If you see protoshares and high profit promises, be skeptical. High profit means high risk, and irregular economic activities entails HUGE risk. If you want to invest, find something that can be trusted  and is regulated so that you don't get scammed. 


Feel free to compare this with the English version from Shanghai Daily

It appears that Xu is indeed in custody. Whether it's *the* Phil Ming Xu, we don't know yet, but it's hard to imagine it can be any one else, as Phil Ming Xu was previously supposedly a producer in Voice of China radio, and later moved to finance as he got to know some stocks and bonds people.

What's surprising is the same scheme was already smashed once in China back in 2012, when it was called Vantone instead of Wantong.  Then was smashed again in the US in 2014, and it was reported in the Chinese media as well (link in Chinese) The scheme splinter was smashed in Taiwan in 2015 (link in Chinese) with 15 people charged.

This seems to suggest that perhaps Phil Ming Xu's link with the Shenyang Vantone scam was deeper than he claimed. He claimed before that he was deceived by the guy in Shenyang into helping him get listed in the US. But if he kept on using the name, then went back to China and STILL kept using the name, it can only be a deliberate choice. But that is speculation.

What is clear is these scammers will keep on scamming until they are stopped. 

No comments:

Post a Comment