The trials for Zhongzhi Group have commenced. Yu, former head of Shanghai's First Branch of Datang Wealth, was sentenced to 3 years and 5 months in prison for illegal public deposit absorption, fined 200,000 yuan, and ordered to return illicit gains. Yu pleaded guilty.

Datang Wealth is one of Zhongzhi's four major third-party wealth management firms. Yu joined in 2015 and from 2017 onward, spearheaded sales of fixed-income products in Shanghai, promising annualized returns of 7%-9.5%. His team sold 2.07 billion yuan to 359 Shanghai clients (averaging 5.77 million yuan per client) and 174 million yuan to 58 Nanchang clients (3 million yuan per client). By the time the scheme collapsed, approximately 885 million yuan remained unpaid.

In March 2024, authorities urged involved parties to "cooperate with investigations and return illegal proceeds." By May, arrests began—targeting mid-to-senior executives and advisors resisting restitution. Yu was among them.

While core executives face massive restitution demands (e.g., Zhou Bin of Hengtian Wealth, with a 95 million yuan annual salary, must repay billions over nine years), Yu’s court-ordered restitution of 1.4 million yuan saw partial repayment (750,000 yuan salary + 80,000 yuan dividends), leaving 560,000 yuan outstanding.

Zhongzhi’s fixed-income shortfall totals 250 billion yuan, with employee restitution nearing 4 billion yuan. Yu’s case is just the start. After Zhongzhi’s 2023 collapse (post-founder Xie Zhikun’s death), 49 core personnel were arrested, prosecuted in November 2024, and face imminent sentencing.

Similarly, EVERGRANDE’s (03333.HK) Hui Ka Yan and key executives (Xu Tenghe, Pan Darong, Liu Yongzhuo) are detained for financial fraud, misappropriation, and suspected illegal fundraising. EVERGRANDE Wealth, once promoted via high-profile sponsorships, raised ~100 billion yuan, including 34 billion yuan unpaid. The group’s total alleged illegal fundraising reaches 400 billion yuan.

Both cases relied on self-directed financing—using shell entities and pseudo-financial exchanges to funnel investor money into opaque capital pools, fueling rapid expansion. Zhongzhi controlled trillion-yuan assets and 10+ listed firms before collapsing with 460 billion yuan liabilities; EVERGRANDE left 2.4 trillion yuan debts.

With scant recoverable assets, restitution hinges on clawbacks. As Yu’s verdict states: "Recovered funds will be proportionally distributed to investors; shortfalls will continue to be pursued." For now, these repayments remain victims’ slim hope.