The sign of Ezubao [Photo: Xinhua]

The Beijing Procuratorate is to hear the fraud case involving China's largest online peer-to-peer lending company, Ezubao.

Eleven suspects, including Ding Ning, the board chairman of Yucheng Global, Ezubao's parent company, and its president Zhang Min, are accused of fraud in financing. Yucheng Global COO Wang Zhihuan and other 14 suspects are accused of illegal pooling of public deposits.

Ezubao was found to have cheated about 900,000 investors out of more than 50 billion yuan (7.6 billion U.S. dollars) during its 18-months in operation.

It was shut down by police in December last year after conducting transactions involving 70 billion yuan.

The police said most investment projects featured on the company website were fake.

An executive from the parent company has admitted that it was nothing but a Ponzi scheme where operators pay returns to its investors from new capital paid to them by new investors, rather than from profit earned through legitimate sources.

Yucheng Global board chairman Ding Ning explained that Ezubao invented projects to attract funds, paying commission to third parties to act as a fake operator, funds were then transferred from Ezubao via the operator to an enterprise associated with Yucheng Global.

In all, about 800 million yuan of commissions were paid out.

Illegal fundraising [Photo: Xinhua]

Police investigated 207 companies on Ezubao's books but only one turned out to have transacted business with Ezubao. Many companies had no idea they were being promoted on the platform.

Ezubao promised investors returns of up to 14.6 percent a year, much higher than they could get at banks. In the event of the investment project turning sour, Ezubao promised to return the initial capital invested, with interest at the average bank rate.

Most of the money went into the pockets of company executives.

Zhang Min said about 80 company executives earned annual salaries above 1 million yuan. Zhang herself received a bonus of 550 million yuan cash, together with a villa, jewelry and cars. A large amount went on advertising and promoting the company.