A death sentence for a young Chinese businesswoman chills entrepreneurs

http://www.economist.com/node/18560729

by kungfooey • 15 years ago

171 70 15 years ago

economist.com

pan692• 15 years ago

China. So close, yet so far away.

pan692• 15 years ago

Off-topic:

The new comment system where votes next to comment aren't shown anymore is quite interesting. Over the course of a day my comment received about 10 up-votes and now an equal amount of down-votes.

My comment was the first to comment made on this post and in the first two hours or so my comment received all it's up-votes. Then, slowly over the next 24 hours it began to sink.

I think the reason my comment received the down votes is because over time more elaborate comments where made that made my comment look more and more insignificant and out of place.

Now I don't think my comment was great and deserved any up-votes what so ever, but it's interesting to see how not showing the votes next to a comment makes such a huge difference and I don't believe my comment would have been down-voted if the 10 up-votes would have been shown next to it.

protomyth• 15 years ago

Does this mean angel investing is illegal in China. I am not sure what "raising and pooling money outside the official system" really means.

kungfooey• 15 years ago

That's a good question. That seems like important context. What does the "official system" consist of, exactly, and why do so many entrepreneurs apparently raise funds outside of it?

ww5202• 15 years ago

Think of it as the wild west of financial system. People can skew the rules or laws by setting up saving and loan "banks" with promise of high return. Of course these are Ponzi scheme with the latecomers paying off the earlier ones, and eventually the "bank" collapses and the "entrepreneurs" simply disappear while many people lose their money.

So many "entrepreneurs" raising funds outside of the rule and law because they can't satisfy the financial regulations that protect the lay investors. And financial scams are lucrative?

She has "raised" hundreds of millions in this case. People losing the their life savings are furious. I'm sure in this case, these people have asked for her head. People who have had millions to start with are usually in the position of power, and they seem to get their wish this time.

Joakal• 15 years ago

There's more to the story since behind door trials occur when officials get involved.

I believe it's more than that due to the wild speculation.

ww5202• 15 years ago

Angel investing in US has the requirement of being Accredited Investors by law, so no you can't just angel investing willy nilly but follows the law (or "official system").

The comparable scale of punishment is another story; on the other hand a few people would wish Madoff was tried in a Chinese court for defaulting people.

will_critchlow• 15 years ago

Really? Is there anything similar in the UK? I don't believe there is - but I generally tend to believe there is less red tape around entrepreneurial activities in the US than the UK (we run businesses in both places).

bilbo0s2• 15 years ago

I don't know.

80% returns?

Really?

She was able to get 80% returns?

GUARANTEED?

This lady kind of sounds like a potential Madoff who got caught early.

Yes, she may be totally innocent. That is one of many possibilities. Having mentioned that... man...

80%?

guaranteed?

Trading Futures?

Maybe the punishment is a bit harsh, but it really does seem she was not totally on the up and up.

And secondly, what kind of a person gives their money to someone promising 80% returns risk-free? Who did she raise this money from?

I mean let's say you're listening to a financial services guy give a pitch over Evian and roasted sweet potatoes with cumin. Right. He says, "I'll get you 80% yearly on your money! Guaranteed! Risk-free!"

Well at that point you and I probably look at each other, and just leave. Who would believe that?

chc• 15 years ago

"A bit harsh" is a lot of an understatement. They're talking about killing her.

SebMortelmans• 15 years ago

+1, Cmon how can you kill someone for raising money, regardless of its whereabouts or accompanied false promises...

"A bit harsh", my god, get a grip

Pinckney• 15 years ago

How is execution different than 150 years in prison, aside from the chance to be exonerated later? Madoff's life is just about as thoroughly destroyed as Wu's. They will both die in prison.

I dislike capital punishment for several reasons, in particular the greater potential to be applied falsely, but I do not feel that Madoff's sentence is substantially less harsh.

raquo• 15 years ago

There are ways to generate such returns if you fund illegal activities (being separated from them by an intermediary) – not necessarily drugs/firearms – stealing government funds (kickbacks, abusing authority, etc.) works even better.

malmros• 15 years ago

Mr/Ms bilboOs... seems your tax return has some discrepancies... possibly serious discrepancies. On another somewhat related topic... Did you say that Ms Wu assured you of... what was that? an 80% return on your investment? That might account for the discrepancy in your return. We can take care of that for you...

daemin• 15 years ago

The 80% return thing reminds me of: http://sheldoncomics.com/archive/040203.html

However I have to say that claiming 80% returns does not make her a potential Bernie Madoff. Since he promised more reasonable rates of return and kept it going for far longer. Therefore on the surface his ponzi scheme seemed much more legitimate than the 80% return of hers.

Now the other thing that got me in the article was using animal placenta as a beauty treatment. I know people are injecting themselves with toxins, so I guess it shouldn't come as that much of a surprise.

gatsby• 15 years ago

This Economist article paints a very different picture from the article below:

http://www.chinadaily.com.cn/china/2009-12/18/content_920158...

Businesswoman gets death sentence for defrauding investors out of tens of millions of dollars vs. Businesswoman gets death sentence for fundraising

tokenadult• 15 years ago

Well, we know which of the two publications has prepublication review of content by the Communist Party of China.

Ygor• 15 years ago

It raises a valid question: How to find reliable sources for stories such as this?

Is it even possible, concerning the usual secrecy of similar processes?

hristov• 15 years ago

You make it sound like the Chinese source is not to be trusted, and you may be right. But this story shows that the Economist is just as trustworthy as any Chinese communist sources (i.e., not very trustworthy).

The Chinese source states: "The money was used for Wu's personal consumption and in paying back the loans and operation costs of her company, said the court."

Now this is a quote from the court which is something that should have been available to the Economist. Nevertheless the Economist made it sound that she was only persecuted for accepting financing from unofficial sources, not that she was doing anything improper with the financing.

A death sentence for running a ponzi scheme sounds like a bit much (but then again I am against most death sentences) but it is a lot less unjust than a death sentence for only accepting financing from unofficial sources, which is what the Economist makes it sound like.

drinian• 15 years ago

Still, a death sentence?

AJ007• 15 years ago

China has the death penalty for many crimes, including tax evasion. This seems to be an appropriate sentence on those levels.

Hopefully there will be people left to run the country after their property and construction bubble pops.

Here are a list of financial crimes punishable by death, per Wikipedia (hope this is a reliable source since there seems to be a debate above!)

    * 12. Whoever, for the purpose of illegal possession, unlawfully raises funds by means of fraud
    * 13. Whoever commits fraud by means of financial bills in any of the following ways:
          o (1) knowingly using forged or altered bills of exchange, promissory notes or cheques;
          o (2) knowingly using invalidated bills of exchange, promissory notes or cheques;
          o (3) illegally using another's bills of exchange, promissory notes or cheques;
          o (4) signing and issuing a rubber cheque or a cheque, on which the seal is not in conformity with the reserved specimen seal, in order to defraud money or property; or
          o (5) signing or issuing bills of exchange or promissory notes without funds as a guaranty, in the capacity of a drawer, falsely specifying the particulars thereon at the time of issue, in order to defraud money or property.

    * 14. Whoever commits fraud by means of a letter of credit in any of the following ways:
          o (1) using a forged or altered letter of credit or any of its attached bills or documents;
          o (2) using an invalidated letter of credit;
          o (3) fraudulently obtaining a letter of credit; or
          o (4) in any other ways.

... AND if the amount involved is especially huge, and especially heavy losses are caused to the interests of the State and the people.

    * 15. Whoever falsely makes out special invoices for value-added tax or any other invoices to defraud a tax refund for exports or to offset tax money if the amount involved is especially huge, and the circumstances are especially serious, thus causing especially heavy losses to the interests of the State.

    * 16. Whoever forges or sells forged special invoices for value-added tax shall, if the number involved is especially huge, and the circumstances are especially serious so that economic order is seriously disrupted.

olalonde• 15 years ago

The problem in China is that the expectation to get caught for any crime at all is very low. The population is huge and it's very easy to get away with tax evasion, financial frauds, etc. Since the expectation to get caught is low, they make up with very harsh sentences.

analyst74• 15 years ago

This is baidu page for her (in Chinese): http://baike.baidu.com/view/606422.htm

I can't say how accurate/objective it is, but based on the discussions on TV and on the Internet, it seems to be fair, and most importantly, very detailed.

russellallen• 15 years ago

If China had a justice system where trials were carried out in the open rather than in secret behind closed doors and a press blackout, then it would be easier for us to determine the truth...

cheez5• 15 years ago

Hey guys, try and follow the laws of the country in which you live.

Even if you think it's unjust, you can't change it if you're dead.

dublinclontarf2• 15 years ago

What if the laws make criminals of ordinary, innocent things. This is pretty much the case in China(and many countries actually) its impossible to live without commiting some kind of crime. Thats how they get you.

cheez5• 15 years ago

This article (inspired by a book, I believe) is relevant:

http://online.wsj.com/article/SB1000142405274870447150457443...

billswift• 15 years ago

Three Felonies a Day: How the Feds Target the Innocent

http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/...

Also read any of James Bovard's books; Lost Rights, Freedom in Chains, Feeling Your Pain, Terrorism and Tyranny, The Bush Betrayal, Attention Deficit Democracy, or Vin Suprynowicz books Send in the Waco Killers and Ballad of Carl Drega or his column on the Las Vegas Review-Journal, http://www.lvrj.com/columnists/Vin_Suprynowicz.html

anonymoushn• 15 years ago

Your odds of changing it do not decrease significantly when you die.

cheez5• 15 years ago

I'm of the opinion that you change more by talking with others.

I guess if you become a martyr, it's different.

rbanffy7• 15 years ago

The law is only just if applied equally. I would have less problems if Chinese authorities prosecuted everyone involved in fraud.

Discretionary application of the law is a worst-case-scenario.

cheez5• 15 years ago

But that's what you have even in Canada and the US if you get down to it. Discretionary = someone made noise about it.

bilbo0s2• 15 years ago

Happens everywhere.

20 year old black guy walking down street gets stopped by cops. Cops find one joint. Punishment: 5 years... he'll serve between 24 and 36 months if he's smart and stays out of trouble inside.

20 year old white guy walking down street gets stopped by cops. (I know, I know, it probably wouldn't happen. Just suspend reality for a moment. You know. Humor me). Again, cops find one joint. DA declines to prosecute. 20 year old white guy is referred to drug treatment options.

BasDirks• 15 years ago

Barbaria.

Edit: I shouldn't attempt irony on the interwebz. Barbaria was said with a wink at history.

jrockway• 15 years ago

Wow, and just when I thought death for mass murderers was a bit too cruel...

PakG12• 15 years ago

Ultimately, she was convicted of “illegal fund-raising” for, the court concluded, raising 773m yuan from illicit sources.

What does this MEAN, I wonder? Money laundering? Or?

rbanffy7• 15 years ago

What strikes me as odd is that she pleaded guilty and helped broaden the investigations and still got a death penalty. This pretty much removes any incentive for a guilty plea and for helping an investigation.

I think it's fairly reasonable to consider whether she is facing capital punishment for financial fraud or for having helped broaden the investigation in the wrong direction.

GregBuchholz2• 15 years ago

>and still got a death penalty.

The death penalty alone is better than execution of you and your kids, or better than torture and execution, etc..

rbanffy7• 15 years ago

I don't think those are options under the Chinese penal code.

aptsurdist3• 15 years ago

This is horrifying and I don't even know where to start examining the problem. Firstly, how do we trust any news source on a case like this when the press is controlled by the accuser? Second, even if the sentence is 'legally correct,' when does the threat of a human rights violation become too important to ignore - should countries be pressured to abolish death sentences (at least) for non-violent crimes? Even if the death penalty is the 'official' punishment to fit the crime, certainly it's a big problem if the actual delivery of that sentence is relegated to a minority of cases in which the government is motivated to prosecute. Of course selective prosecution is a problem with any legal system, but when the sentence is death it is all the more important to monitor cases through a transparent system. It doesn't seem that this kind of transparency is in place. http://www.cbsnews.com/stories/2010/08/23/business/main67982... see: "...the judicial system is overly secretive in deciding on death penalty cases." http://www.time.com/time/world/article/0,8599,2014070,00.htm... see: "...opaqueness of its legal system."

aptsurdist3• 15 years ago

[@PG and the hacker news team: I think it's pretty important to see some indication of supporting votes on these comments. Please keep considering if you want to bring back that feature in some form. Thanks!]

lisperforlife• 15 years ago

Please correct me if I am wrong. Basically she is dying because she defrauded a bunch of rich dudes and created employment opportunities. The rich dudes are pissed and so she is now facing a death sentence? This is pretty screwed.

Sending her to jail is one thing but death sentence. That is just idiotic.

A death sentence for a young Chinese businesswoman chills entrepreneurs

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