‘Legendary’ Chinese rice trader Lin bought US bank that never existed

In A China awash with fake iPhones, pirated DVDs and counterfeit Louis Vuitton bags, rice trader Lin Chunping has taken fraud to a whole new level by inventing a US bank and claiming he bought it.

The little-known businessman shot to fame in January when state media reported that he had taken over the Delaware-based Atlantic Bank. The unprecedented acquisition brought him praise. His hometown gave him a prestigious political appointment and state media called his business experience “legendary”.

The only thing that may have been legendary is Lin’s audacity. Not only did he not buy Atlantic Bank in Delaware for $60 million as he claimed, but there is no Atlantic Bank in that US state.

Chinese reporters could not locate an Atlantic Bank or a bank registration by Lin in Delaware. He is now under arrest for an unrelated fraud and has been forced to give up his municipal-level appointment to the Chinese People’s Political Consultative Conference, the government’s top advisory body.

Lin, who was arrested earlier this month, could not be reached for comment. However, the 41-year-old’s short, spectacular rise and fall shows how fakery has evolved in China from the manufacture of copycat goods to entire institutions and careers.

Lin told Chinese reporters that it took him two years to negotiate the purchase of the US bank, and that the bank had declared bankruptcy in 2008 because of the financial crisis. To add more flair to the story, Lin said that the bank had been running for 85 years and was run by Jews, who are stereotypically seen by many Chinese as having superior business skills.

Lin’s story was particularly captivating because overseas acquisitions are a point of pride in China, showcasing its rising economic power.

His claims also cheered his hometown, the eastern city of Wenzhou, which was reeling from a government-imposed credit crunch that had ruined some highly indebted entrepreneurs, some of whom fled the city and their debts.

“People were shocked that an obscure businessman bought a foreign bank and it was a US bank nonetheless. He wasn’t even a banker to begin with,” said Zhu Xiaochuan, a researcher on China’s financial law at CEIBS Lujiazui Institute of International Finance in Shanghai. “The news must be credible because it was in mainstream media. The public were amazed how wealthy Wenzhou businessmen were.” A profile on the website of the ruling Communist Party’s newspaper People’s Daily depicts Lin as sharp and hardworking, selling buttons as a teenager, then purchasing a copper and gold mine in Ghana and investing in the rice business in China.

Lin said he renamed the bank USA New HSBC Federation Consortium and that the institution had attracted $40m in deposits with the prospect of turning an annual profit of $5m to $6m. The new name had an air of respectability, borrowing from the London-based HSBC Holdings, whose brand is well-known in China.

Lin is not known to have made any money off his bank claims, but after they were shown to be false he apparently became a target in a police campaign to crack down on economic crimes.

A statement on the Wenzhou police website said he is suspected of having falsified invoices worth of hundreds of millions of yuan through several companies in a tax-evading scheme.