Law Firm Chief Surrenders Over 1B RMB Financing Collapse

Chairman Surrenders After 1 Billion RMB Financing Scheme Collapses

Mei Xiangrong, the former global chairman of Yingke Law Firm, surrendered to Shanghai police in March after a financing scheme he championed collapsed, leaving investors with significant losses. The Shanghai Public Security Bureau’s Jing’an Branch confirmed on March 16 that it has launched a formal investigation into the case. While rumors initially cited a 4 billion RMB figure, sources within the firm state the actual scale of the external financing was 1 billion RMB (approx. $140 million).

The scheme lured investors by leveraging the credibility of Yingke, which is the world's largest law firm by number of lawyers. Investors signed "Market Partner Agreements" that carried the law firm's official contract seal and Mei's personal signature. These agreements promised substantial returns, with one investor's contract guaranteeing a 27.5% return over a three-year term. Victims include retirees, with one 70-year-old individual investing 2.2 million RMB and an 80-year-old investing as much as 10 million RMB.

Funds Diverted to High-Risk Family Ventures

The financing operation appears to have served as a capital pool for Mei's sprawling family-run business empire. Although investment contracts were signed with Yingke Law Firm, evidence suggests funds were directed to entities like Shanghai Yingke Enterprise Management Co., a company controlled by Mei's family. Investors were sold on the security of the law firm, often marketed as a company that would "never default," while their capital was funneled into high-risk ventures outside of legal services.

Since 2015, Mei had built a conglomerate through Beijing Yingke Global Holdings, which he controlled, that spanned tourism, education, and even hydrogen-powered automobiles. This cross-industry expansion was funded by the high-yield financing. Several of these family-controlled businesses were already showing signs of financial distress. For instance, his hydrogen vehicle company, Xiangrong Qingneng Automobile, was named as a judgment debtor in July 2023, and Mei exited his 40% stake in the company in January 2024.

Firm Rushes to Limit Fallout, Changes Legal Status

Yingke Law Firm has moved swiftly to distance itself from the scandal and contain the financial and reputational damage. On March 10, the firm's global board elected a new chairman, officially removing Mei from his leadership role. More critically, on March 2, the firm's legal structure was changed from a general partnership to a special general partnership. This change is significant as it shields uninvolved partners from personal liability for debts arising from the intentional misconduct or gross negligence of a single partner, effectively insulating them from the financing scheme's fallout.

For investors, the path to recovery is uncertain. A proposal reportedly relayed by Mei's sister to repay investors over a 10-year period has been rejected. Meanwhile, the crisis has impacted the firm's internal finances, with lawyers at the Beijing headquarters reporting delays in withdrawing their fees. The event highlights significant regulatory gaps concerning the financial activities of professional services firms and their charismatic leaders.