China court jails scandal-hit Fanya metals exchange founder for 18 years - Xinhua

* Fanya founder Shan Jiuliang jailed for 18 yrs for embezzlement

* Company behind exchange fined 1 bln yuan for illegal fundraising

* Minor metals bourse collapsed in 2015 and was taken over by govt

* Sentence does not address where money is - Fanya investor (Adds detail, background, investor reaction)

By Tom Daly and David Stanway

BEIJING/SHANGHAI, March 22 (Reuters) - A Chinese court on Friday fined the firm behind the now-defunct Fanya Nonferrous Metals Exchange 1 billion yuan ($149.04 million) for illegal fundraising and handed its founder a lengthy prison term, the official Xinhua news agency reported.

The Kunming Intermediate People's Court sentenced Shan Jiuliang, who founded and ran the minor metals bourse, to 18 years in prison for crimes including embezzlement, according to a Xinhua report carried on the court's website.

Shan, whose company was said to have caused investors "huge economic losses," was also fined 500,000 yuan and had 50 million yuan of his personal property confiscated, the report added.

The Fanya exchange was launched in 2011 in Kunming, in southwest China's Yunnan province, with the aim of raising the prices of minor metals like bismuth by building up stockpiles using money borrowed from thousands of individual investors.

But the exchange froze transactions and members' accounts in 2015 after experiencing "liquidity" problems and was later taken over by government investigators.

The same Kunming court had in January attempted to raise funds to pay off investors owed nearly 40 billion yuan by auctioning off the bourse's inventories of indium, a silvery metal used in flat-panel screens and semi-conductors, on Chinese e-commerce platform Taobao.

The sale ultimately attracted no bids.

Asked on Friday if the court's decision was good news, one former Fanya investor said it had fallen short of the investors' expectations. "Where is the money? The key question is not addressed in the sentence," he said.

Besides Shan, 20 other defendants are facing criminal charges for Fanya-related crimes, Xinhua said. These include Yang Guohong, the former vice president of the exchange, who is accused of illegally appropriating property by abusing his position.

Reuters was not immediately able to reach Shan, Yang or their representatives for comment.

($1 = 6.7098 Chinese yuan) (Reporting by Tom Daly in BEIJING and David Stanway in SHANGHAI; Editing by Gopakumar Warrier and Shreejay Sinha)

First Published: 2019-03-22 10:53:46
Updated 2019-03-22 12:22:54


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