A closed branch office of Ezubao is seen in Hangzhou, Zhejiang province, on February 1, 2016. Photo: Reuters

A Beijing court on Tuesday sentenced the architect of the US$9 billion Ezubao online financial scam to life imprisonment, and handed down jail time to 26 others, marking the close of one of the biggest Ponzi schemes in modern Chinese history.

The ruling comes at a time when the government is stepping up efforts to crack down on risky and illicit behavior in the country’s financial sector, including an unruly peer-to-peer industry that continues to attract high volumes of deposits.

Beijing First Intermediate People’s Court sentenced Ding Ning – the chairman of Anhui Yucheng Holdings Group, which launched Ezubao in 2014 – to life in prison and fined him 100 million yuan (US$15.29 million) for crimes including illegal fundraising, illegal gun possession and smuggling precious metals.

Ding Dian, the chairman’s brother, was also sentenced to life, while Zhang Min, Yucheng’s president, and 24 others, were sentenced to imprisonment for between 3 and 15 years, according to an article on the Beijing Courts social media account.

Ezubao, once China’s biggest P2P lending platform, folded last year after it turned out to be a Ponzi scheme that collected 59.8 billion yuan (US$9.14 billion) from more than 900,000 investors through savvy marketing.

By the time police made arrests in early 2016, the company had failed to repay 38 billion yuan.

The incident sparked a crackdown on the freewheeling online financial services market and led to new regulations to control China’s P2P industry, monthly volumes in which are above US$50 billion, according to statistics published by the industry portal P2P001.

Ezubao’s excesses became a cautionary tale following its collapse. Ding collected a monthly salary of 1 million yuan, and admitted on state television to spending an estimated 1.5 billion yuan in Ezubao funds on himself.

“We fabricated projects to raise money,” Ding said, according to a Xinhua report published last year. He admitted using fabricated project companies to re-circulate cash back into accounts linked to his companies.

Ding apparently also asked dozens of his secretaries to dress only in Chanel, Gucci and other luxury branded clothing to make the company appear successful.

Reuters