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By Zhao Runhua, Han Yi and Han Wei / Jun 21, 2019 06:50 PM / Politics & Law

Zhang Xiaolei is questioned by police on Jan. 14, 2018. Photo: VCG

Zhang Xiaolei is questioned by police on Jan. 14, 2018. Photo: VCG

Zhang Xiaolei, the man behind one of China’s largest illegal online fundraising case in history, has been sentenced to 15 years in prison for "fundraising fraud," according to state-run broadcaster CCTV.

Zhang, who was head of internet finance company Qbao.com, used his company to raise 70 billion yuan ($10 billion) illegally, a source close to the authorities told Caixin last year. The court in Nanjing that sentenced Zhang said it would also seize 100 million yuan worth of his personal assets.

The company promised high annualized investment returns to investors as long as they made a required amount of deposits and participated in promotional activities such as signing into their Qbao accounts every day. The company claimed that depositors who placed 1 million yuan with Qbao could receive a bonus of as much as 1,000 yuan each day.

Qbao said it was investing the deposits into promising enterprises to generate gains to pay members. But it mainly used funds raised from new investors to pay yields for existing investors, police involved in the investigation said. Some of the money raised was also used by Zhang for “lavish personal consumption,” the court said.

Qbao’s model was ultimately unsustainable. Unable to pay back investors, Zhang was accused of running a Ponzi scheme and surrendered to police in 2017.

Zhang pleaded guilty to the charges against him, and said he won’t appeal.

Contact reporter Zhao Runhua (runhuazhao@caixin.com)

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