Chairman to Hang for Ant Scam - TheStreet

Chairman to Hang for Ant Scam

A Chinese business executive is sentenced to death for ripping off investors of $385 million.
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If Bernie Ebbers and Jeffrey Skilling think the punishments for their corporate misdeeds were harsh, they should be glad they're not Wang Zhendong.

Wang, the chairman of China-based Yingkou Donghua Trading Group, was sentenced to death by hanging for swindling $385 million from investors in a ant-breeding scam, according to China's state-run

Xinhua News Agency

. Only $1.3 million of the swindled money has been recovered.

In addition, 15 company managers were sentenced to prison terms ranging from five to 10 years and fines between $12,800 and $64,000.

In China, ants have been consumed for thousands of years as a remedy for a number of ailments. In the mid-1990s, the Chinese government began promoting ant consumption for health benefits, claiming the insect can help cure hepatitis B, rheumatoid diseases, lumbago and other ailments.

Taking advantage of China's high demand for ants, Wang's company sold $25 packages of ants to gullible investors for as much as $1,300.

With promises of returns of up to 60%, more than 10,000 people signed 100,000 contracts with the bogus company before the case came under investigation in June 2005. One investor was so distraught at losing his money that he committed suicide.

The Chinese government has been cracking down on what it calls "economic crimes" such as the one committed by Wang, announcing that they "could trigger social instability and imperil the economic security of the country."

In 2006, Chinese authorities arrested about 370,000 suspects of economic crimes and recovered some $13 billion.

Michael Katz joined

TheStreet.com

in 2007. Michael has previously worked as a reporter at

Forbes

and an editor for two custom publishers, SmartMoney Custom Solutions and HNW Inc. He also worked in London as a freelance media reporter and correspondent for

Broadcasting & Cable

magazine. Michael has a B.A. in English from the University of Virginia.