Chinese financial company accused of fleecing investors of $7.6 billion

reporting from beijing —  Chinese police arrested 21 employees at the country’s largest online finance business on suspicion of fleecing 900,000 investors for $7.6 billion, in what could be the biggest financial fraud in Chinese history.

State media outlets reported the arrests late Sunday, and state broadcaster CCTV aired purported confessions from two former employees at Ezubao, an Anhui province firm that rose from obscurity to become China’s largest online financing platform in the span of about 18 months.

Ezubao was the most spectacular player in a booming online investment industry that Chinese authorities have been struggling to regulate. Firms ranging from established Internet companies such as Alibaba to virtually unknown upstarts have flooded into the business, promising higher returns than those at state-run banks.

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Ezubao promised investors that borrowers on its platform would pay back loans at interest rates between 9% and 14.6%, but 95% of those borrowers were fictional entities created by Ezubao, a former company executive told investigators.

The company advertised heavily online and bought expensive ad spots that aired just before the widely viewed nightly newscast on CCTV, the state broadcaster, former investors told the Associated Press.

Police shut down the operation in December, prompting scores of protesters to gather in Beijing to demand their money back.