A TAX scam ringleader who had dodged 34 million yuan (US$4.12 million) in taxes has been sentenced to 17 years imprisonment by a Shenzhen court.

　　Five of his subordinates received jail terms ranging from three to 11 years. Several others are still at large.

　　Ringleader Hong Zhongbiao, a 42-year-old resident of Chaoyang in eastern Guangdong Province, was convicted of evading the 34 million yuan in taxes by selling value-added tax receipts, based on bogus contracts, with a total of more than 200 million yuan.

　　Between 1998 and 2000, he registered six front companies in Shenzhen which obtained blank tax receipts from the taxation bureau with the help of two tax officials, Kuang Guobing and Qiu Weinan.

　　The verdict said his ring sold the receipts at prices ranging between 1 and 2 percent of receipt amounts to other companies which then used the receipts to deduct payable taxes. But Hong’s companies did not pay the taxes stated in the receipts, causing huge revenue losses to the State.

　　The Shenzhen Intermediate People’s Court said officials had recovered all the 34 million yuan taxes which should have been paid at the time Hong’s companies issued the receipts.

　　Hong’s offenses, which included tax evasion and bribing, could have resulted in much harsher punishment. But the court cut Hong’s jail terms to 17 years, with a fine of 500,000 yuan, because of his cooperation with investigators.

　　The scam began to unravel when State auditors discovered suspicious tax receipts in the account books of an unidentified listed firm in Shenzhen in July 2000.

　　As the auditors delved into the tangled transactions, they found the companies which had issued the receipts for huge amounts had all disappeared.

　　Further investigations linked the bogus firms to Hong, who was arrested the day after the Mid-Autumn Festival in 2000 when he was “reunited” with his mistress in Guangzhou.

　　Former tax officials Kuang and Qiu, who were found by the court to have received bribes of about 100,000 yuan and 250,000 yuan from the ring, were jailed last year, with Kuang for four years and Qiu for seven.