(Yicai Global) July 14 -- A Chinese court has sentenced the founder of Chinese financial services provider Neo Capital Management Group to life imprisonment for the misappropriation of CNY102.6 billion (USD14.4 billion) worth of deposits from the general public and for raising CNY8.9 billion (USD1.2 billion) by fraudulent means.

Peng Tie, who is also legal representative and majority shareholder of Neo Capital, will also be deprived of any political rights and have all his personal property confiscated, the Shenzhen Intermediate People’s Court said today. The other 25 defendants were sentenced to between two and 11 years in jail and fined.

The case was opened by the Nanshan branch of the Shenzhen police on Jan. 8, 2021 after it started to suspect that the accused were illegally taking public deposits.

The sentence marks the spectacular downfall of Peng, who set up Neo Capital in 2013 as a peer-to-peer online lending platform and wealth management firm that was very successful in its early years. Together with several subsidiaries that he established later, the Shenzhen-based company accepted CNY102.6 billion worth of deposits from 1.3 million clients. Some CNY12.6 billion (USD1.8 billion) of this remains missing, the court said.

Due to the phasing out of the P2P lending model and other factors, the firm racked up an abnormally high bad debt rate and a huge funding gap. Peng and other five people used fraudulent means to raise CNY8.9 billion which they used to repay the principal and interest and for their own personal expenses.

Police have made every effort to recover the funds involved, including stocks, equity and properties, the court said. The recovered assets will be returned to the rightful owners in accordance with the law after the judgment comes into effect.

Editor: Kim Taylor