GRANDPARENT TRAP

She finally found a facility in Changsha run by Shunxiang Senior’s Life Management Company in 2018. She paid the 300,000- yuan (US$46,200) deposit to be placed on a waiting list, nearly her entire savings from years working as a blind masseuse in Shenzhen. 　

However, as Luo waited for a vacancy, other elderly people who had also placed deposits with Shunxiang told her the company was already bankrupt. 　

Luo lost both her deposit and her retirement plan. On December 24, 2021, the Intermediate People’s Court of Changsha sentenced two Shunxiang executives to life for illegal financing and fraud, with five others – including Shunxiang president Qi Fuming – getting 15 years on the same charges. The court ruled that from January 2016 to September 2019, Shunxiang had taken 1.73 billion yuan (US$266.2m) from around 21,000 people. 　

Chinese media has reported on similar cases over the past several years, where suspects lure elderly people into paying large deposits with promises of quality services or high rebates, then abscond with the cash. Even if they are caught, the victims rarely see their money again. 　

According to a 2021 Beijing News report that looked at nearly 100 court cases against elderly care homes, each case averaged about 770 victims, with some individuals cheated several times. 　

In April 2022, the Chinese government launched a six-month campaign targeting fraud involving seniors and adult care homes. So far, 1,040 cases involving 17,500 suspects have been prosecuted, preventing more than 8.4 billion yuan (US$1.2b) in economic losses. 

Huang Guoliang, a 77-year-old widower, met two salespeople as they handed out flyers for Shunxiang on the street. They invited Huang to visit the elder care center, and even showed up at his apartment to help with housework. While driving Huang home after visiting the facility, one of the salespeople got a ticket for running a red light. Huang said he felt guilty, and booked a spot at Shunxiang with them. 　

Luo Boyue, another victim, saw an ad for Shunxiang on television. Looking for an adult care center that would also take her daughter, who is diagnosed with schizophrenia, she took one of Shunxiang’s free shuttle buses to tour the facility in Changsha’s Wangcheng District. 　

There, Luo attended the company’s presentation. It included a performance from a pop singer and a speech from Shunxiang’s president, Qi Fuming, in which he vowed the company would “treat them with filial piety.” Luo was convinced and paid the 260,000- yuan (US$40,000) deposit afterwards. 　

These meetings occurred once every several days. Huang Tiancheng, an 82-year-old victim, even increased his deposit when he was invited to a meeting with Shunxiang’s leaders who told him about the company’s investment opportunities in real estate, hotels, gold and tea. Huang said that he saw many sign and renew contracts with Shunxiang at the meeting he attended. He also recommended the facility to his sister and brother-in-law. 　

Many victims said they were sold on Shunxiang by its salespeople, who worked on high commission and would ply customers for sympathy with personal stories. According to Huang Tiancheng, one saleswoman claimed she was a single mother and pleaded for his business. He ended up paying another 10,000 yuan (US$1,538.5) to renew his contract. 　

Huang Guoliang told NewsChina that his salesman resorted to more nefarious means. “He told me that I could have a single bedroom for 200,000 yuan (US$30,800)... and 150,000 yuan (US$23,000) for a double. Knowing that I only had more than 100,000 yuan (US$15,400) in savings, he told me that he could make up the difference if I mortgaged my apartment to him,” Huang said. Although he refused the mortgage proposal, he put up 150,000 yuan (US$23,100) of his deceased wife’s pension fund. 

　

According to the court’s ruling, Shunxiang also lured in victims with promises of profit, such as a 7-12 percent annual return on their deposit and an additional 2-4 percent for a “tree planting subsidy.” They claimed the funds were accessible at any time or could be applied to future expenses at the home. Once a contract expired, the company would return the principal. 

Huang Guoliang recalled how he was excited when he first visited the Shunxiang facility. “It was near mountains and water, and it had a shaded path and a pond for fishing. It also had an activity center and a rehabilitation clinic,” he told NewsChina. “I fell in love with it at first sight,” he added. 　

Luo Youwu sensed Shunxiang’s other selling points. “Although I could not see [the scenery], I felt the fresh air there, and didn’t feel any dust on the tables and floors,” Luo said, adding that most public nursing homes do not take blind people. 　

Liu Jianbin, a former colleague of Luo Youwu who is also blind and moved into Shunxiang in 2015, told NewsChina the home has 310 beds and has been upgrading since it opened in 2013. Soon after Liu moved in, the home equipped each room with a staff call button for assistance, and added a covered corridor between the residential buildings and the dining hall to shelter residents from the rain. 　

Liu said that although Shunxiang was at full occupancy by 2017, shuttle buses of potential residents kept coming. “At the peak, there were 400-500 visitors a day,” Liu said. “We had become like a living advertisement,” he added. 　

Salespeople told visitors the company was building another elder care home. According to flyers, the new facility would have 2,000 beds with several six-story buildings and villas. Huang Tiancheng visited the construction site twice and saw half-finished buildings under construction. 　

However, this was part of the scam. According to experts, some companies dupe clients by presenting a completed facility with promises of another, or with a group of building façades never intended to be completed. In May 2022, a Wuhan court heard a case against Xijiangyue Ecological Tourism Company, which had convinced more than 1,000 people to pay a deposit for a spot at their facility. Upon visiting the site, customers saw more than 30 buildings the company claimed were under construction. However, the buildings were empty shells. 　

According to the courts, the Xijiangyue home and Shunxiang’s second facility were both illegal developments that misused rural land. In Shunxiang’s case, the court said the failing company kept coaxing new victims to hand over deposits, which it used to pay financiers and dividends to previous clients. 

These trends, coupled with younger people migrating to urban centers for work, mean the traditional family structures that once helped to provide elder care now face tremendous challenges. 　

In 2013, the Chinese government issued a document encouraging private capital to invest in elder care fields. That same year, fraud targeting the elderly reached a peak. 

Shunxiang, for example, began signing up residents in Changsha in 2013. Over the following years, the company expanded to neighboring cities. By 2016, the company heads had incorporated and expanded their businesses to other provinces like Zhejiang. 　

According to the 2013 regulation, elder care facilities cannot charge or sign up customers without an operating license. The civil affairs bureau of Changsha said Shunxiang had never received one. 　

Authorities notified Shunxiang several times between 2014 and 2018 to resolve the issue. In 2016, Wangcheng District civil affairs bureau determined that Shunxiang was not qualified to provide elder care services and should be targeted for supervision. However, Shunxiang was not deterred. 　

Victims told NewsChina that their trust in Shunxiang stemmed from the reputations of its leaders. Wang Guomei, for example, was a member of the local People’s Political Consultative Conference of Baojing County. Jia Shunxiang, another suspect named in the case, was a retired director of the Standing Committee of People’s Congress of Baojing County. Both Wang and Jia were sentenced to life in prison. Shunxiang’s president Qi Fuming once headed a large State-owned enterprise. He received 15 years in prison. 　

“Although Wang and Jia rarely appeared at presentations, Qi frequented them and stressed how they were passionate about the elder care industry,” Huang Tiancheng told NewsChina, adding that several local officials have visited the facility. “We felt secure because we thought that the home was supported by the [local] government,” he said. 　

According to media reports in 2016, Hunan Province’s business rating bureau gave Shunxiang its highest, AAA. The next year, the company was awarded by the Hunan Provincial Association of the Aged Social Service as a “leading contributor company.” 　

Similarly, Xijiangyue in Wuhan was never licensed for elder care services. A police officer in Wuhan told NewsChina on condition of anonymity that the company built the home before getting all the required building permits. Local media reports show that Xijiangyue’s facility was promoted by the local county government to attract investment. 　

Some of these cases ended in tragedy. In January 2021, a 62-year-old man in Hunan Province committed suicide by jumping off a bridge after learning he was cheated out of 170,000 yuan (US$26,000) by a local elder care home. Media reports said the facility, Nuoma, had duped more than 4,000 people between 62-89 years old. 　

Most of the victims cannot get their money back. According to the legal representatives for the victims in the Shunxiang case, police only recovered 3 million yuan (US$444,800) out of the total 1.73 billion yuan (US$266.2m) owed. 　

Liu Jianbin told NewsChina he now lives in a nurse’s home, who also cares for several other elderly people. Although he still has 400,000 yuan (US$61,500) owing from Shunxiang, the company denies it took the sum. But Liu considers himself luckier than the thousands of other victims that never lived a single day in the home they paid for. 

Luo Youwu said she has given up on finding a nursing home she can afford. Spots at public nursing homes are getting harder to come by in China. As the overall population ages, demand for public nursing homes continues to exceed supply, while private facilities struggle with staff and capital shortages. 　

Most people in need cannot afford them. 　

In June 2021, Huang Guoliang became a Buddhist monk and moved into a temple in Changsha for a time before returning to his empty apartment. Huang said he no longer tours nursing homes. Instead, he is picking out a funeral home, he said.