Risky and Dangerous Investments

The Chinese government has taken a hard approach to dealing with individuals who make risky and bad investment decisions. Recently, the Chinese courts have sentenced two businesswomen, Wang Caipang and Wu Ying, to death for their role in their failed investment strategies.

In Wang Caipang’s case, it was reported that she defrauded her investors when she borrowed $15.9 million and invested in a different purpose than what she promised to her investors. Wang’s strategy to invest in the futures and gold markets failed, she was charged with fraud, and sentenced to death. While this result is harsh, at least a recognizable crime was committed. In stark contrast, the case of Wu Ying does not seem to be the type of case that is associated with fraud. Wu Ying also failed in her investment strategy; however, she did not defraud her investors. Wu actually used the money do what she said she would do.

So what crime did Wu commit? Wu had to invest money from loan sharks because the government-owned banks would not give her the loan money she needed to begin her business. To finance her business, Wu borrowed at the high interest rate of 0.5% per day, and eventually lost about half of the money that she borrowed. The publicity surrounding her success and the statuses of her investors led to her arrest. However, there is another side to this story. Once Wu was arrested she was forced to reveal the identity of her investors, leading some to believe that Wu was sentenced to death to prevent her from releasing this information. 

See Rich Smith, Investing in China Took Her From Rags to Riches to Death Row, DailyFinance, Apr. 16, 2012.

Special thanks to David S. Luber (Attorney at law, Florida Probate Attorney Wills and Estates Law Firm) for bringing this article to my attention.