Seniors warned of illegal fundraising

Over 2,000 people prosecuted for investment scams targeting elderly

The Supreme People's Procuratorate has warned senior citizens to remain vigilant about illegal fundraising activities within the elderly care sector.

There were 1,932 people prosecuted for such crimes last year, with an additional 343 prosecuted in the first half of this year.

Illegal fundraising through investments in elderly care has become a key focus of a nationwide operation to combat fraud targeting the elderly. The initiative was launched in April 2022 by 12 central departments, including the top procuratorate. At a meeting in September 2022, the national office for combating fraud related to elderly care mandated that all departments maintain a strict and rigorous approach toward eldercare fraud.

In a statement issued on Wednesday, the top procuratorate highlighted that some unscrupulous individuals lure the elderly into investments supposedly linked to concepts such as blockchain, equity investments, private equity, and prominent national strategies like the Belt and Road Initiative and rural revitalization.

It said some perpetrators use services like tourism, health preservation and domestic services as bait, and often tailor the models to target different types of elderly people.

The statement also emphasized the risks associated with deceiving seniors into using personal property as collateral.

Perpetrators frequently target the retirement needs of the elderly by presenting high-risk financial products as secure and profitable investment opportunities. Seniors are misled into using their personal property as collateral for investments that promise high returns. When the investments inevitably fail, the properties used as collateral are liquidated, often leaving the elderly without their promised returns and homes, and burdened with significant debt.

The top procuratorate highlighted the role played by loan intermediaries and lending institutions that help in signing mortgage loans, connect the elderly with small loan companies, trust companies and other funding entities, and may even assist in fabricating or falsifying loan materials inconsistent with investors' financial status.

It also said offenders often misuse the funds for personal extravagance or to cover investment losses, making it challenging to recover the misappropriated assets.

Some perpetrators manipulate funds through multiple account transfers and consolidate funds into third-party payment platforms, creating a financial "black box" that complicates efforts to trace the flow of funds.

In one case highlighted by the top procuratorate, a criminal surnamed Dai began operating an apartment for the elderly in 2010. To finance additional projects, Dai took on private lending and bank loans, ultimately accumulating significant debts due to mismanagement. To repay the debts, Dai and four accomplices established three new projects under the apartment's name and began engaging in illegal fundraising activities in January 2013.

They formed marketing teams to promote their projects, enticing individuals with promises of high returns and preferential elderly care services.

By March 2018, they had collected over 136 million yuan ($19 million) from more than 2,100 individuals. The majority of the funds were misappropriated by Dai, resulting in a loss of over 93 million yuan for the investors, with only a small portion used for the apartments' daily operations.

In February 2021, Dai was sentenced to 15 years in prison and fined 400,000 yuan for fundraising fraud. The other four defendants received sentences ranging from eight years and 11 months to two years and eight months.