Thursday, January 12, 2012

44 Detentions in Chinese Pyramid Scheme

"It's so wealthy there now, they drive expensive luxury cars." --my friend returning from a recent trip to China.

"Wealth" != "Access to excessive credit"

What was the loan shark scheme based on? Housing projects, of course. The usual story, participants in the scheme borrowed money and sold goods to put as much cash as possible into the loan pool.

44 arrested over loans in 'the village of BMWs'
MORE than 40 residents in "the village of BMWs" in east China's Jiangsu Province have been arrested in connection with a multi-million yuan loan shark and pyramid scheme.

Some 200 million yuan (US$31.65 million) has been retrieved, according to Xinhua news agency.

In not dissimilar news, Arthur Laffer, the supply-side God, is accused by investors of selling his influence to help prop up a Ponzi scheme based initially on what? Real estate.
Investors Say Supply Sider Arthur Laffer Backed a Ponzi
HOUSTON (CN) - Fifty-two investors claim fund managers associated with supply-side economist Arthur Laffer took $3.1 million to prop up a Ponzi scheme, then said nothing as their money was "wasted with no reasonable expectation of recovery."
It continues: "The limited partnerships are investment vehicles run by defendants Wallace and Bajjali, with endorsement and participation from Laffer. They started out primarily in real estate investments, and solicited investors for their various real estate investments. In September 2006, WBIF II made its first investment in Business Radio Network, LP ('BizRadio') in the form of advancing convertible promissory notes. By December 31, 2006, WBIF had advanced to BizRadio $1,493,170.00, and by June 30, 2007 the invested balance in BizRadio was up to $3,157,170.00. LFWEOF [Laffer Frishberg Wallace Economic Opportunity Fund] has contributed significantly more than that. At that time, BizRadio was looking to purchase radio stations in both Houston and Dallas/Fort worth at an estimated cost of $12,000,000.00.

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