Arrest warrants have been issued for three Chinese men who allegedly operated a massive Ponzi scheme featuring online stock and feared to have swindled more than 200,000 Chinese citizens out of approximately $384 million. Police have arrested several members of the scam allegedly masterminded by a Chinese man named Yun (Many Chinese go by only their surname), who remains the only suspect still on the lam. The scheme operated through a website, Hootoot660, that was based in the United States. Instances of widescale financial fraud are relatively rare in China, due in part to a booming economy and a government that seeks to tightly control the spread of unfavorable or harmful news.
According to authorities, Hootoot660 offered investors the chance to achieve lucrative returns through the purchase of an online stock called Guquan that was purported to never drop in value. After paying a membership fee to join, members could then further increase their returns by receiving commissions for recruiting new members to the scheme. However, according to police, there was no "online stock" known as Guquan. Instead, Hootoot660 used incoming investor funds to pay returns to existing investors - a classic Ponzi scheme. The scheme is estimated to have taken in nearly $400 million from over 200,000 victims.
Police arrested the scheme's co-founder, Pang, earlier this year, along with another co-conspirator. Details remain forthcoming.