Hundreds of people in central China have been duped out of AUS $41.8 million by a fake bank.

Three farmers hatched the idea of renting a property in Nanjing and borrowing money to outfit it like a real bank. The premises had security guards, computers, LED display screens showing real time interest and foreign exchange rates … everything a real bank has – except legitimacy.

In fact, authorities are impressed with how much detail three fraudsters went to in their hoax.

The ‘bank’ had opened in 2013 and began offering interest rates well above those of its competitors. This attracted a large number of depositors and allowed the bank to trade as a Ponzi scheme for nearly two years.

One man, only wishing to be known as Shan, admitted he had been fleeced out of almost AUS $1 million. He said he his account had been credited with $68,470 in interest. However, when he attempted to withdraw it there was nothing to withdraw.

In an interview with NPR, Oliver Rui, from the China Europe International Business School, said that education and appearance were a problem for many rural Chinese consumers. They lacked the knowledge to protect themselves from financial scams such as this and judged authenticity merely by appearances.

“People are not well-educated on financial services,” he said. “People think as long as there is an office and it looks like a bank it will provide the bank’s services. They want to earn high interest, but they don’t understand that the high interest usually comes with high risk.”

The three masterminds are currently in police custody. There has been no word on what has been done with customers’ deposits.

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