In Depth: Elderly Care Ponzi Scheme Exposes Official Corruption

Five years after the collapse of a massive Ponzi scheme masquerading as an elderly care service in Central China, an official investigation has highlighted systematic inaction and corruption within local government agencies, which allowed this fraud to persist unchecked for over a decade [para. 1]. At the heart of the scandal is Golden Sunset Elderly Care Apartment, initially established in Hengyang, Hunan province, in the mid-2000s. Although it was presented as a private, nonprofit nursing home to provide centralized care for seniors, the project devolved into an illegal fundraising scheme before construction even began [para. 2][para. 3].

The scheme, masterminded by Li Xinhui and his wife Quan Jun, lured hundreds of elderly individuals and other investors by offering discounted pre-payment resident contracts and promising high investment returns, regardless of actual residency needs [para. 3]. Over time, despite repeated government warnings about illegal fundraising, Golden Sunset continued to grow until its collapse in late 2019, when it defaulted on payouts, prompting widespread demands for refunds [para. 4]. The couple were ultimately convicted of fraud and illegal fundraising in 2022, having amassed more than 2.8 billion yuan ($382.5 million) from their victims [para. 5].

Subsequent court documents revealed that at least four local officials from the Yanfeng District Civil Affairs Bureau were also implicated, facing charges ranging from abuse of power to corruption [para. 6]. In fact, regulatory authorities had noticed Golden Sunset’s illicit activities as early as 2007, yet official warnings and internal reports consistently went unheeded, resulting in a lack of timely intervention [para. 7][para. 8]. Between 2017 and 2019, district civil affairs officials—namely Lu Yaqin, Li Xiangrong, and Wang Runsheng—failed to monitor or inspect the scheme, with officials either denying their authority to intervene or submitting inadequate, often copy-pasted, responses to official inquiries [para. 9-16]. Court records show that these officials treated regulatory inspections as mere formalities, and some were personally bribed—Li Xiangrong, for example, allegedly accepted over 700,000 yuan in bribes between 2014 and 2019 [para. 17]. In addition, relatives of civil affairs officials reportedly had financial ties to Golden Sunset [para. 17].

The case resulted in significant state losses, including the mismanagement of 3.2 million yuan in assets [para. 15]. In 2024, local courts sentenced Li Xiangrong to seven years in prison for abuse of power and corruption, while Lu and Wang received five-year sentences each; another official, Deng Guilan, was sentenced to three years for dereliction of duty [para. 23]. However, the officials have appealed, with the core of their defense centered on whether regulatory authority covered financial oversight—something only formally included in their remit by the Ministry of Civil Affairs in 2020 [para. 25][para. 26]. After an initial round of convictions, a higher court later sent the case back for retrial, citing unclear facts [para. 29].

Golden Sunset’s operation began as early as 2004, exploiting China’s growing demand for elderly care and generous policy support [para. 31-33]. By 2007, the project had raised over 300 million yuan from elderly investors, offering annual returns of 8% to 14% on deposits starting at 20,000 yuan [para. 33]. The founders also attempted to legitimize the operation by listing associated companies on overseas markets, further boosting their credibility [para. 35]. However, the Ponzi scheme faltered when new investments could not keep pace with obligations, ultimately collapsing in 2019 [para. 36]. Li and Quan’s sentences were confirmed on appeal, and 30 others were convicted for their roles [para. 37].

The scheme’s collapse revealed broader problems: between 2019 and 2021, Hunan alone saw over 70 illegal fundraising cases in elderly care, impacting 90,000 victims and involving more than 8 billion yuan [para. 38]. Chinese authorities have since recognized the sector’s regulatory weaknesses and called for stricter oversight [para. 39].