SHANGHAI, May 14 (Xinhua) -- Shanghai police have uncovered the first case in the city involving the use of live-streaming rewards to carry out fraudulent invoicing, with the amount of falsely issued invoices verified to exceed 2 billion yuan, police said. Shanghai police disclosed the case at a press conference held on the 14th.

"There is 5 million worth of 'meat' in the top tipper's account; DM for details." In April 2023, an advertisement appeared on the internet that drew the attention of Shanghai police. After preliminary analysis, police suspected that the "meat" mentioned in the ad most likely referred to the invoiceable quota generated after the "top tipper" recharged and rewarded funds on a live-streaming platform, and that this invoicing quota was very likely being used to commit the crime of fraudulent invoicing. Police immediately launched an investigation.

After nearly a year of meticulous investigation, police, together with tax inspection authorities, followed the leads and uncovered a complete tax-related criminal chain spanning Shanghai, Jiangsu, Guangdong, Hunan, Sichuan and other places, including intermediary account brokers and fraudulent invoicing gangs. In March 2024, Shanghai police carried out a coordinated crackdown, apprehending more than 40 suspects including Ge, Huang and Pan, and seizing over 80 pieces of equipment used in the crimes, including mobile phones and SIM bank devices. To date, the amount of falsely issued invoices verified exceeds 2 billion yuan. Police said this is the first case cracked by Shanghai public security authorities involving the use of surplus invoicing quota from live-streaming rewards to commit fraudulent invoicing crimes.

The suspects used the invoiceable quota generated after recharging and rewarding funds on live-streaming platforms to commit the crime of fraudulent invoicing.

Investigation found that intermediary account broker Ge and others purchased more than 3,000 platform accounts on major live-streaming platforms at prices ranging from several thousand yuan to over a million yuan, depending on the level of each account. These accounts, including those bought from "top tippers," were resold at high prices, while the invoiceable quota within them became the source of huge illicit gains for Ge and others. Ge and his associates used the invoicing quota in these accounts, paying account holders 0.8% to 1.5% of each account's invoiceable quota as remuneration, and then, at the request of downstream fraudulent invoicing gangs led by Huang and Pan, directly issued false invoices from the platforms to their designated companies at 2% to 3.5% of the invoiced amount, with the total value of falsely issued special VAT invoices and ordinary invoices exceeding 500 million yuan.

Huang, Pan and other fraudulent invoicing gangs, meanwhile, used more than 130 shell companies they had registered to "launder" the falsely issued invoices, then charged invoicing fees of 7.5% to 12% of the face value before issuing large volumes of false invoices externally. By the time of the bust, the fraudulent invoicing gangs led by Huang and Pan had issued false invoices with a total value exceeding 2 billion yuan, illegally profiting more than 10 million yuan.

At present, all more than 40 suspects in this case have been subjected to criminal coercive measures in accordance with the law on suspicion of the crime of falsely issuing special VAT invoices and the crime of falsely issuing invoices. The case is under further investigation.