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World China sentences Anbang founder to 18 years for fraud

HONG KONG — Wu Xiaohui, the Chinese tycoon who rose to international prominence to buy the Waldorf Astoria Hotel, was sentenced to 18 years in prison Thursday after having pleaded guilty to defrauding investors.

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China sentences Anbang founder to 18 years for fraud play

China sentences Anbang founder to 18 years for fraud

(Townhall Finance)

Wu was convicted by a court in Shanghai of using the company he founded, Anbang Insurance Group, to cheat investors out of more than $10 billion, in one of China’s biggest cases of financial crime.

Facing a potential life sentence, Wu had pleaded guilty to the charges and asked the court to consider a lighter sentence.

The Shanghai No. 1 Intermediate People’s Court handed down its sentence as 50 people, including members of Wu’s family, sat in the courtroom, according to a statement from the court.

Wu was thrust into the spotlight in February when the government seized Anbang, in part of a crackdown on companies that have acquired too much debt by bingeing on overseas assets.

He initially contested the charges in March during his first and only appearance in the court, which included allegations that he had instructed his employees to flee overseas and change their contact information when the government began investigating the company last year.

“I repent deeply, I know and regret my crimes,” Wu said then in a televised statement from the court.

Anbang went on an international buying spree in recent years, most notably acquiring the Waldorf Astoria Hotel in Manhattan for $2 billion.

When the government seized Anbang earlier this year, it shook investors as far as Vancouver, where the company owns a retirement home, and Amsterdam, where it owns an insurance company.

Chinese prosecutors accused Wu of a convoluted scheme in which he hid his control in Anbang through of a web of companies. According to the prosecutors, Wu instructed employees to falsify financial statements and marketing information. In this way, the government said, Wu was able to skirt regulations and raise money from the public.

The court said in a statement that it had seized Wu’s bank accounts, real estate and equity.

In a response Thursday, Anbang said that Wu had been removed from his duties as chairman of the company, adding that its operations are under government supervision.

“Anbang has sufficient cash flow to fulfill its commitments to all customers and ensure that the legitimate rights of policyholders are effectively protected,” the company said in a statement.

Wu’s lawyer, Zhai Jian, declined to comment.

This article originally appeared in The New York Times.

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