Justice Has Long Arms: Fake Forex Agents and WeChat Platform Brought to Justice

Source: Fazzaco 2020-06-24

Recently, an elite group of 150 police officers in Changsha, the capital city of Hunan Province in Central China, arrested 54 suspects in their dens in Anhui, Zhejiang and other provinces in a campaign to crack down on forex scams, which helped return over 1 million yuan to thousands of victims.

It was found that a fake forex App called “Dongheng International” was used in the telecom scam and the boss Hu Guanglei behind the evil was sentenced to a 10-year imprisonment.

Fraud gangsters of Jinshida Consultancy and Baihong Tech, the two fake agents, were sentenced to imprisonment of 1 to 7 years and fine of tens of thousands of yuan on a charge of fraud.

One thing should be noted in the case is that Baoming Technology, an App distributor was also convicted. But why?

I. Case review: The App distributor aided the tied agents to expand fraud network

1.Agent expanded fraud network

By impersonating attractive ladies, the “Dongheng International” fraudsters lured investors to register in the App after acquiring their information in Taobao and required them for a top-up of at least 520 yuan. After gathering all the victims in a group, a phony expert analyst would share “trading strategies” while others in the team would encourage investors to trade frequently and add deposit by sending fake screenshots of high returns.

Nevertheless, the amount in the virtual account could be easily falsified and the leverage could be controlled to deduct 25% of investor returns. Investors would still suffer loss when he or she went long in the case of bullish candlestick patterns because a “blacklist” mechanism was introduced, and their deposit would be frozen as long as they made profits.

But the case was not as easy as it seemed. After investigating the capital flow, police found that large sums of money were transferred between the legal representative of Jinshida Consultancy and Hu Guanglei, the real owner of “Dongheng International”. The App was also connected to Baihong Tech, which was a fake agent using the same scheme as Jinshida.

After investors’ deposit was transferred to Hu Guanglei’s bank account through a third-party payment platform, he would deduct 2% as personal gain before transferring the money back to the agent’s account.

2. App distributor aided the evildoer

Another question came after the criminal group was found: Where did the victims download the “Dongheng International” App?

It turned out that the fake App came from an unregulated platform called Dafu App Store developed by Baoming Technology. After payment, users were able to upload Apps and given a download link. At the same time, Baoming Technology would bypass IOS certificates and signed the unauthorized certificates of users for download.

Usually, regulated App stores, such as those developed by Xiaomi, Huawei, and 360, shall be reviewed and approved by related authorities. But Baoming Technology launched the IOS and Apple versions of “Dongheng International” App without authorization and charged users based on downloads.

Baoming Technology’s assistance to the devil opened channels for the scammers. The police arrested the three responsible persons of the company on a charge of crime of assisting the information and network-related criminal activities.

Relationship Diagram

In total, 54 suspects were seized in this one-million-yuan-worth forex scam, and over 100 mobile phones and 32 computers were confiscated.

II. Views from Lawyers: The principal shall be subject to more severe sentence while the accessory shall be convicted

In this case, Hu Guanglei only took 2% of the scammed money, while the two agents, as the manipulator of the whole criminal group, not only defrauded many investors but also took the lion’s share of the money. But why was the sentence to the two agents lighter?

The court explained that in the joint fraud crime, the responsible persons of the two agents only played the role of agent managers, but it was Hu Guanglei who created the fake App to seek illegal profits. So it is justifiable to sentence him to a heavier punishment as the principal offender.

Why was Baoming Technology convicted?

Knowing “Dongheng International” was using Internet to commit fraud, Baoming Technology still provided the scammer with Internet access, server hosting, online storage, communication, transfer, and other technological services to a degree where the circumstance was serious. The behaviors of the responsible persons of Baoming Technology constituted the crime of assisting the information and network-related criminal activities.

3. Reflection: Investors should refrain from gambling, and agents should get rid of fluke mind.

The fraudsters succeeded in swindling more than 1000 investors and scamming over one million yuan in the “Dongheng International” App because they took advantage of the investors’ vulnerability in believing “throwing a sprat to catch a mackerel” and “small amount of gambling is entertaining”, and also the the convenience of the new form of forex trading—low threshold and easy operation.

Many victims thought the data shown on the App was in sync with the global market, but in fact it was completely fabricated, which could be manipulated by the scammers as they wished.

Investors should keep in mind that China hasn’t established mature laws regulating forex trading on Apps, so please keep alert against these types of transactions and resist the temptations of the so-called high returns.

On the other hand, Baoming Technology might make a sophistry that it only launched an App for other companies instead of involving directly in the scam and should be considered innocent. But the company’s responsible persons were keenly aware that it was due to their illegal behavior to launch the App without authorization that provided the tool for the fraudsters.

Baoming Technology was also a fox in the criminal group! Fleecing over 1000 victims out of more than one million yuan, the company can hardly absolve itself of the blame. The court verdict also sounds the alarm for all companies in the industry: Justice has long arms. Get rid of fluke mind, otherwise whoever digs a pit will fall into it.

Forex Fraud

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Justice Has Long Arms: Fake Forex Agents and WeChat Platform Brought to Justice

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