A wanted criminal has taken possession of Zhaojin! Funds went around in a circle to pump out 240 million in revenue, and the former chairman asked for 9 years in prison

Chen Jianlin, the actual person in charge of the listed company Zhaojin Technology, and his girlfriend Li Qumi were suspected of packaging loans into memory transactions, allowing the company's funds to change hands through related companies, and then flow back in the name of payment for goods. From 2018 to 2020, the total inflated revenue exceeded 240 million yuan. The Taipei District Prosecutor's Office investigated and prosecuted eight people for violating the Securities and Exchange Act. Chen Qiu was sentenced to 6 years in prison, and former chairman and general manager Ji Zheng Xiaoqiu was sentenced to 9 years in prison.

According to prosecutors' investigation, 36-year-old Chen Jianlin, nicknamed Peter, had previously been sentenced for violating the Securities and Exchange Act. He was wanted before he showed up for execution. During the arrest period, he impersonated another person's identity and obtained the management rights of Zhaojin with his 51-year-old girlfriend Li Qiaomi.

Zhaojin was formerly known as Youwang Technology. Chen and Li obtained equity in a borrowed company name in 2017, and then used the shareholders' meeting to dismiss the original management team, re-elect directors, and control more than half of the seats on the board of directors. Later, Ji Zhengxiao was appointed as chairman and Li as vice chairman.

At that time, Zhaojin's original business profits were greatly reduced. In order to create the illusion of revenue growth after the new team took over, in order to facilitate external fund-raising, Chen invited Jiji's then general manager Xu Junxian to introduce memory trading. In fact, Zhaojin funded the short-term turnover of the company controlled by Ji.

From March to May 2018, Zhaojin first remitted money in the name of prepayment to Peikang Company controlled by Ji, and then Peikang transferred the money to Jin Yi, Hong Kong Shang Yili and Ji himself, and Yili remitted the money to After Jin Yi and Jin Hui, Jin Yi and Jin Hui finally remitted it back to Zhaojin in the name of payment for goods, forming a circular cash flow; Zhaojin paid a total of approximately 142.96 million yuan and recovered approximately 125.4 million yuan.

The memories in these transactions are not unpacked, processed or packaged, and the original goods are shipped on the same day or within a few days of purchase. The gross profit margin of the transaction is less than 2%. Chief Financial Officer Chen Yuanshui once asked the accountant, knowing that the conditions for full recognition of revenue were not met, but still listed the full amount of the transaction as sales revenue with Chen Jianlin and others. The total inflated revenue in three months was approximately 137.83 million yuan, of which the inflated portion in March accounted for more than 40% of the revenue for that month.

Since 2019, Ji has cooperated with Ye Xincun, the head of Chuangwei Company, and Zhaojin has provided short-term financing with an agreed annual interest rate of 1% to 1.5%. Deputy general manager Zheng Qingzan and Ye's nephew Kuang Zhixuan have served as contact windows to arrange memory transactions.

The prosecutor traced that Zhaojin first paid the payment to Chuangwei in advance. Chuangwei transferred the money to Ye's Bluebelt and Intervision companies on the day of receipt or within one week, then transferred it to Jinzun and Intelligent companies, and finally returned it to Zhaojin in the name of "payment for goods". Zhaojin paid a total of approximately 154.39 million yuan and received approximately 118.97 million yuan. The repayment actually came from the funds previously paid by Zhaojin.

However, Zhaojin listed the full amount of the transaction as sales revenue, with an inflated increase of approximately 97.47 million yuan and 13.11 million yuan in 2019 and 2020 respectively. In addition, the goods actually used as loan guarantees were listed as inventory, and the financing situation was not disclosed. In June 2020, Ernst & Young found that Chuangwei and Jinzun had the same registered address. After an interview with Ye, they confirmed that they were related companies and raised doubts about the transaction. Zhaojin then voluntarily terminated the appointment and replaced the visa accountant.

The prosecutor in charge, Chen Wenjin, found that the goods left in Zhaojin have been sold to Hong Kong customers one after another according to Ye's arrangement since August 2021, and the proceeds were used to repay the loan. Although Ji knew the nature of the money, he still listed the total amount of approximately US$880,000 in 2021 and 2022 as operating income, and made an announcement after signing the financial report.

The prosecution also pointed out that Chen Jianlin obtained the right to operate a listed company during the wanted period, took charge of the case and did not confess after committing the crime, and requested a sentence of 6 years; Ji Zhengxiaojing continued the crime after being corrected by accountant Ji Zhengxiaojing for a period of 4 years. He also concealed transactions with related parties and obtained huge loans from banks with false financial information. After the crime, he denied the crime. It is recommended that a heavier sentence be imposed, and the sentence should be executed for 9 years.