Man Sentenced to Death for Ant-Breeding Scam

In the late 1990s, a Chinese entrepreneur named Wang Fengyou captivated thousands with promises of high returns from an unlikely source — ant farming. What began as a business selling traditional remedies soon spiraled into one of China's largest Ponzi schemes, leaving investors penniless and a nation shocked.

From Potatoes to Ponzi: The Rise of Wang Fengyou

Wang Fengyou's journey from poverty to prominence seemed like a rags-to-riches success story. Born into a poor family, he initially made a living selling potatoes and later ventured into businesses like bottling plants and taxi services. However, his most ambitious and ultimately notorious venture was the Yilishen Tianxi Group, founded in 1999, which specialized in traditional Chinese medicines, including an aphrodisiac made from ants.

The Birth of a Scam

In 2001, Wang launched a new scheme, promising lucrative returns to rural investors. These investors, often displaced by land development, were offered three boxes of "special" ants for ¥10,000 ($1,600) with the guarantee that after feeding them, the ants could be sold back to the company for a 32.5% profit within 14 months. In reality, the company was never profitable; it operated as a Ponzi scheme, using new investors' money to pay returns to earlier participants.

A House of Cards Begins to Collapse

The scheme began to unravel in 2004 when the US Food and Drug Administration banned Yilishen's products, alleging that they contained ingredients similar to those found in Viagra. This blow forced the company to abandon its plans to list on the Hong Kong Stock Exchange, and its sales plummeted. Desperate to maintain the illusion of success, Wang intensified his recruitment efforts, but by 2007, the money had dried up. The result was mass protests by over 200,000 defrauded investors, forcing authorities to take action.

The Downfall of Wang Fengyou

Wang Fengyou's downfall was swift and severe. After being arrested in 2007, he was forced to confess to organizing counter-protests to suppress investor unrest. The Chinese courts did not show leniency; Wang was sentenced to death, and many of his company's managers received prison sentences ranging from five to 10 years. The scam had swindled approximately $385 million from over 10,000 investors, but only a fraction of this was ever recovered.

As per China's legal system, Wang Fengyou's death sentence would have required review by the Supreme People's Court for approval. However, there is little public information available to confirm whether or not the conviction has been executed.

Lessons From a Historic Fraud

Wang Fengyou's ant-breeding scam serves as a stark reminder of the dangers of trusting seemingly legitimate enterprises, especially in emerging markets where transparency can be limited. Despite the endorsements from local celebrities and government officials, the scheme was nothing more than an elaborate fraud that left thousands of lives shattered. For investors, the lesson is clear: due diligence is essential, and high returns often come with high risks.

Wang Fengyou's elaborate scheme may have begun with humble ants, but it ended with devastation on a massive scale.

References: Great frauds in history: Wang Fengyou's ant-breeding scam | Death Penalty For Chinese Ant Farm Scammer | Law Amended To Require SPC Approval of All Death Sentences