Caixin
Jan 29, 2021 08:15 PM
CHINA

In Depth: How an Ex-Migrant Worker Built a Million-Dollar Crime Ring on Prostitution, Fraud and Intimidation

The corrupt antics of a former Chinese mafia boss sentenced to death last year have been revealed in graphic detail in a Caixin investigation.

Zhao Fuqiang led a criminal organization that amassed nearly 1 billion yuan ($155 million) by illegally subletting real estate in Shanghai and silencing opponents with violence and threats.

In return for legal protection, he also ran a prostitution ring used by local businessmen and government officials, who likened the apartment where the liaisons took place to the setting of one of China’s great romance novels.

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A seven-story building that Zhao Fuqiang rented as his office in Yangpu district in Shanghai. Photo: Tang Ailin/Caixin

Zhao’s case shows how criminal groups in China cultivate wide-ranging corruption networks to sustain illegal activities, and illuminates the difficulties of President Xi Jinping’s years-long crackdown on graft.

In September, Zhao was sentenced to death with a two-year reprieve, while 37 associates received sentences ranging from two and a half to 20 years in prison. The latter group included a former member of a district standing committee in Shanghai, the former head of the same district’s court, the former director of a major industry and commerce bureau, and the chief and deputy chief of the local police branch where Zhao operated.

Zhao was convicted of a litany of crimes, including organizing, leading and participating in a mafia-like organization; rape; organizing prostitution; organizing group sex sessions, which is a crime in China; paying bribes; fraud; extortion and blackmail; “picking quarrels and provoking trouble,” a vague crime often used to punish violent behavior; forced trading; and theft.

As the actual controller of Shanghai Yusheng Investment Management Co. Ltd., Zhao oversaw illegal rentals of more than 1,300 commercial addresses in nine Shanghai districts between 2012 and 2019, raking in total profits of 970 million yuan, according to the court verdict.

The group made money in part by illegally subletting commercial real estate at inflated prices, a ruse aided by creating fraudulent paperwork and threatening tenants with violence.

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In September, Zhao was sentenced to death with a two-year reprieve, while 37 associates received sentences ranging from two and a half to 20 years in prison.

One victim, surnamed Hu, told Caixin she rented a store from Zhao in 2010 but soon found it had been sublet to another person, an act that breached contract terms. One of Zhao’s colleagues later showed her a different signed contract for the property that permitted subletting.

Fearing fraud, Hu took the matter to the police, who refused to pursue the case. She then sought to resolve the matter in a private meeting with Zhao, who she said bragged about his contacts in the police force and cronies who were “sick in the head,” and “asked if a little person like (Hu) thought they could win” a lawsuit against him.

Zhao’s company also brought in cash by other means. In one instance, the group defrauded the state to the tune of 54 million yuan by extracting rent and urban renewal compensation from the city government, the court verdict said.

Zhao’s brazenness stemmed in part from his close relationships with officials in the government, the police force and at state-owned enterprises.

Starting in 2010, Zhao, his ex-wife and other associates “recruited, managed and controlled” 10 women to serve as prostitutes for state functionaries “in order to gain illegal profits.”

Often, Zhao would arrange for sexual liaisons to take place on the fourth-floor office of the building in Yangpu district where his company was headquartered. The office’s crystal chandeliers and gold-inlaid porcelain tiles prompted officials to nickname it the “Little Red Chamber,” a nod to the setting for a Chinese romance novel written in the 18th century.

Messages sent via social messaging app WeChat and subsequently seen by Caixin showed that Zhao would refer clients to a company “public relations department” for help arranging sex with women, who were often referred to by three-digit codes.

The department maintained an extensive list of services, from drinking and singing karaoke with female hostesses to all-night sex sessions costing between 7,000 and 10,000 yuan.

Additionally, Zhao and city officials greased each other’s palms with gifts of food, alcohol, prepaid shopping cards and hard cash, according to court records and interviews with people directly involved.

XIAOHONG CHART

Zhao’s role in facilitating prostitution was rooted in his early business ventures in Shanghai. Several women who worked at two hair salons he ran in the early 2000s described being forced into sex work to earn extra money for the company.

A former salon employee, who requested anonymity to protect her privacy, told Caixin that Zhao pressured her into starting a sexual relationship with him and later persuaded her to work as a prostitute “to make money for our family,” while also withholding her wages and beating her when she refused to obey him.

“Zhao Fuqiang is a monster,” she said.

In those days, Zhao once said he was “so poor that (he’d) do anything to make money.” Prior to coming to Shanghai, he spent a decade as a migrant laborer, tailor and clothing factory manager.

Born in 1973, Zhao grew up in an impoverished part of East China’s now-booming Jiangsu province. His mother died soon after giving birth to him, and other family members spoiled him throughout his childhood, according to his sister, Zhao Zhu.

Contact editor Michael Bellart (michaelbellart@caixin.com)

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