HONG KONG — Hundreds of people, including Burmese jade dealers, have seen their fortunes vanish in a scam described as the biggest jade fraud case in the history of the People’s Republic of China, police in the country’s southwest have revealed.
Up to 1 billion yuan (US$160 million) worth of jade treasures were taken by a 33-year-old Chinese conman named Zhong Xiong over the past few months, according to Chinese police’s preliminary investigation.
“Overall, what he did was to find a hole in the cross border trade and present himself as a rich man to approach potential dealers who were desperate to sell their products,” according to one jade dealer surnamed Xie, who said he was approached by Zhong.
Every year, a large number of raw jade stones are shipped to Yunnan province from neighboring Burma. Burmese jade is considered to be the world’s highest quality, and the jade trade between the two countries—much of it illicit—was estimated at $8 billion in 2011 by the Harvard Ash Center.
After being crafted by artisans, a variety of valuable jade pieces stream into the Chinese market. In the jewelry industry, it is common to lend or exchange inventory on an informal basis, giving customers more choice and products more exposure to potential buyers.
Zhong is said to have told victims that he knew wealthy clients in Shanghai and Beijing who wanted artifacts made from the highest quality jade. But after collecting the jade items, Zhong disappeared without paying for them, the Oriental Morning Post reported.
According to police, Zhong presented himself as a man of immense wealth, living an extravagant lifestyle and driving flashy cars. By wining and dining other gems dealers, he quickly befriended local merchants.
Revelations of the scam come at a time when China’s jade market has shrunk sharply. Police believe jewelry traders and individual lenders facing a business downturn were lured by the promise of a huge backlog of jade to be sold.
The scam has damaged the trust between Burmese and Chinese jade traders—relations built over decades of doing business together.
“In this industry, dealers are relying on their own personal credit. They have to deal with some middlemen to sell the product,” said Xie. “Zhong presented himself as a generous man, so nobody suspected he might be a fraud.
“It must have been planned for a long time. For a scam of such scale, it needed to be well prepared for years, gaining trust step by step.”
Sixty-seven victims had reported the scam to police by April. Zhong was arrested in May and is currently being held by authorities, awaiting trial.
The swindled come from major jade trading centers in Yunnan such as Kunming, Tengchong and Ruili, as well as other Chinese provinces and even across the border in Burma, according to Chinese reports. But the total victims could number in the hundreds, as most dealers borrow and lend jade items to others, including business partners in Burma.
Yang Yuan, who lost 27.32 million yuan, said he could no longer return home as most of the items came from business partners from Ruili and Burma. “They have been looking for me, and I have no money to pay them back,” Yang told The Paper, a Mandarin-language daily.
Police have not yet disclosed a specific total value for the stolen goods, saying only that the amount is “huge.” Reports have said the number could be north of 1 billion yuan. It is also unclear how many dealers from Burma were roped into the scam.
Xie said jade dealers would most certainly be more cautious in the future, but the trader remained optimistic about the jade market’s future prospects.
“As the wealthy people in China gradually increase, the good days are just beginning,” he said. “Twenty years ago, only people who lived in affluent areas like Hong Kong, Taiwan or Guangdong bought jade, but now there are buyers from every part of China.”