A woman living in New York’s Chinatown has been accused of scamming $20 million from over 100 investors in her underground ‘money pool clubs’.
Wenlan Zang has received 120 complaints from investors in up to 14 money pool clubs she ran across Chinatown between 2013 to 2017, reported the New York Post.
A lawsuit filed by investors is now being heard by the Manhattan Supreme Court.
Money pooling, also known as informal loan clubs, is a centuries-old system used by the globally impoverished to save for short-term expenses. They usually consist of family members, coworkers, or close friends.
Although money pools are more common in developing countries where the poor may have difficulty accessing credit, they have also been used by immigrant communities in the United States.
In this case, members of Zang’s money clubs were fellow Chinese immigrants looking for quick cash.
Members of the money pool commit to contributing a fixed amount of cash to the pool each month. The fund manager is then supposed to distribute the pool, also known as the lump sum, to the prospective borrow who offered the highest “bid”.
Members of Zang’s clubs, however, which consist of 76 to 78 members each, claimed that Zang did not comply with the bidding process, resulting in massive fraud.
Those who have contributed money to the pool never received their money back, reported New York Daily News .
“None of the plaintiffs received back their contribution, which they had made for years,” the lawsuit indicates. “By fraudulently representing to the plaintiffs that the money was bid by some other members, Wenlan and her family misappropriated all the contributions made by the club members”.
One of her victims allegedly is Xiuying Zou, a 66 year old who she met at a Buddhist temple. She is now suffering from a $198,000 loss, according to the lawsuit.
Court papers also state that the funds Zang misappropriated from members were used to purchase properties in the U.S., China, and Brazil.
Aihoung You, the lawyer representing the plaintiffs, did not respond to the NY Posts’ advances for further updates on the case.
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