On December 5, 2018, the Changfeng Xincun Police Station of the Putuo Branch of the Shanghai Public Security Bureau received an off-site report. The caller had purchased a "stock option" product from a certain asset management company in the Changfeng area at a high price, only to be inexplicably liquidated within a week. Suspecting fraud, he reported the case.
Case Review
01 Release of Profit Information
Last winter, Mr. Jin received a call at home from an unfamiliar woman. On the other end, the woman asked Mr. Jin to help her complete a task. Kind-hearted, Mr. Jin agreed and, as requested, added a WeChat contact named "Youyou." Subsequently, "Youyou" added Mr. Jin to a WeChat group called "Stock Talk and Asset Growth Exchange Group." Mr. Jin noticed that the group discussions focused on stocks and individual stock options.
Luring Participation in "Individual Stock Options"
"Youyou" then recommended another WeChat contact named "Lemon," introducing her as an assistant. "Lemon" shared a link in the group for a "Financial Services APP," asking Mr. Jin to download and install it. Since group members were constantly posting about making big money from stocks and options, Mr. Jin gradually became tempted and asked "Lemon" how to participate in "individual stock option" investments.
02 Hooked and Forced Liquidation
"Lemon" told Mr. Jin that the entry price for "individual stock options" with a 220% profit margin was 100,000 yuan. When she learned Mr. Jin intended to invest only 50,000 yuan, she quickly changed her tune, claiming she could help him purchase a 50,000 yuan share using internal employee status, and guaranteed 100% profitability. That same afternoon after the transfer, Mr. Jin received a call from someone claiming to be an investment analyst. Through the company’s "Financial Services APP," he opened a position by buying 50,000 yuan worth of "individual stock options" for a particular stock. Unexpectedly, Mr. Jin, who expected to "make money while lying down," was liquidated within just one week, leaving only over 10,000 yuan in his account, and was subsequently removed from the WeChat group.
Scammers Set Up a Fake "Complaints Department"
Feeling cheated, Mr. Jin lodged a complaint with "Lemon." Fearing he would go to the police, the scammers sent someone claiming to be from the customer service department to negotiate, and transferred 6,500 yuan to Mr. Jin. Ultimately, Mr. Jin still chose to call the police.
03 No Investment Qualifications
Individual Stock Options
"Individual stock options" are what are commonly referred to as "over-the-counter stock options." They are non-standardized financial speculative transactions with individual stock option contracts as the target, conducted in non-fixed, non-unified trading venues. The prerequisite for investment is that the company must be a legitimate securities firm.
First, it was necessary to determine whether the involved company had the "individual stock option" investment qualifications claimed by the reporter. Police officers specially visited the Shanghai Securities Regulatory Bureau's Futures Supervision Division, the Shanghai Futures Industry Association's Institutional Department Two, and other professional institutions, confirming that the company's relevant "individual stock option" investment qualifications were entirely fabricated.
The Criminal Gang Emerges
Although the company was registered in the Changfeng area of Putuo, its actual place of operation was not in Putuo. Based on the information provided by the reporter, the special task force started by tracing bank account flows and investigating various information related to the company. During the investigation, police also discovered over 300 other victims with experiences similar to Mr. Jin's, involving a total amount of over 24 million yuan. After painstakingly peeling back layers of evidence, the task force finally located the company's actual place of business and personnel, and successfully identified the company's "management."
04 All Members Apprehended
Various signs from the investigation indicated that this was a criminal gang with a tight organizational structure and a large number of personnel. On January 6, 2019, the task force began arrests. Suspects including Zhu were successively apprehended at their residences, and suspects including Tan voluntarily surrendered to the police. Thus, the main members of this telecom network fraud gang, which operated under the guise of "individual stock option" investments, were all captured.
Clear Organizational Division of Labor
After arrest, the suspects confessed to their crimes. In March 2018, suspects Huan, Xue, and Zhu obtained the operating rights of an asset management company registered in the Changfeng area of Putuo by changing shareholders. Suspects Xue, Tan, and Luo took charge of managing the company, and hired someone to create a company website. On the homepage, they uploaded false information, including various "individual stock futures" operation guides, partnership relationships with major securities companies, and fund flow diagrams that did not match actual operations. Sales personnel like Xie used illegally obtained personal information to contact victims, inducing them to download the company's self-developed "Financial Services APP" and invest funds into so-called "individual stock option" products. Once the funds were transferred to the company's account, suspect Huang, responsible for finance, transferred all the victims' funds to multiple private accounts preset by the company. Then, backend employees like Shi, Chen, and Huang Ming manipulated backend data to fabricate stock trends, creating the illusion of victims suffering losses and being forced to liquidate, thereby defrauding them of money.
Currently, ten suspects including Huan have been transferred by Putuo police to the procuratorate for prosecution on charges of fraud. The case is still under further investigation.
Police Reminder
The investment market carries risks. Over-the-counter margin trading is mainly conducted through online margin platforms of internet financial companies. The entry threshold is low, but the risk is extremely high, potentially leading to huge debt risks. However, many small and medium-sized investors, driven by the dream of getting rich overnight, are still willing to take risks and try over-the-counter margin trading. This gives scammers opportunities to commit telecom network fraud by using fake financial derivative transactions.
Duty Editor: Xie Chenyang
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Editor's Note: If you encounter fraud, please bravely call 110