Heaven on Earth – Billionaire Chinese Fraud and Corruption in the US
The Asian Crime Century briefing 72
Last week a US federal court sentenced Chinese national Qin Hui (aka Hui Qin, Muk Lam Li and Karl), recorded by Forbes in 2018 as a billionaire with a net worth of $1.8 billion, to seven months imprisonment after he pleaded guilty to charges relating to making political contributions in the names of others, immigration fraud and producing a false identification document.
Not only did Qin engage in fraud and corruption, but according to the US Department of Justice case against him also was linked to a “PRC government official” who has not been named in the trial documents but issued an “alias” to Qin as far back as 2008, possible through corruption but also possible for political reasons.
The background of Qin shows him to be an interesting recruit for both a fraud scheme as well as influencing activities on behalf of the PRC government in the US, and is worth reviewing.
Qin Hui and the Heaven on Earth Nightclub
According to Caixin, Qin was born in Sichuan Province and became successful in business through the notorious Heaven and Earth Nightclub in Beijing. Through the club, Qin met influential political and business leaders in Beijing and went on to invest in the film and media industry.
Qin Hui was reportedly the proprietor of the Heaven and Earth Nightclub (or sometimes called the ‘Passion Club’) located in the Great Wall Sheraton Hotel in Beijing from the late 1990s. The club was famous for its “66 pink ladies” who worked as waitresses, hostesses, and courtesans to the wealthy clientele. The club was famous for the skills of the ’66 pink ladies’, who reportedly charged no less than 3,000 yuan ($420) for personal services that were offered in private boxes on the upper VIP floors of the club. Qin has over the years denied that any “dirty services” were provided and commented that the ’66 pink ladies’ had a strict dress code that included not wearing jeans. The Heaven and Earth Club was closed down by the Beijing police in 2010 as part of a wider crackdown on private clubs, but reopened later.
Qin has a longer history of involvement in questionable business before the Heaven and Earth Club. In 2005 police in China reportedly detained Qin at his home in Beijing in connection with an investigation of senior bank officials, including former president of the China Construction Bank Zhang Enzhao. In 2009 the Chinese authorities reportedly executed Li Peiying, the former chairman of state-owned airport holding company Capital Airports Holding Company, after he was convicted on bribery and theft charges involving more than $14.6 million. During the trial of Li it was revealed that most of the bribes paid to him came from Qin Hui.
Qin was the chairman and majority owner of SMI Holdings Group Ltd, which is listed on the Hong Kong Stock Exchange but has had mixed fortunes over the years. SMI Group operated around 320 cinemas in China, but went through financial difficulties around 2018 during the downturn in Chinese cinema business, partly as a result of over-investment. In 2018, SMI Group closed 140 cinemas and admitted debts of at least $60 million in unpaid wages and rent.
SMI Holdings Group Ltd has also had a colourful bunch of characters as board members over the years. In 2004, co-deputy chairmen of the company were Eric Tsang Chi Wai and Natalis Chan Pak Cheung. Eric Tsang has a history of links through the movie business to Triad society members. His father, Tsang Kai-wing, was a ‘Sergeant Major’ in the Royal Hong Kong Police, who worked under the infamous 'HK$500 Million Sergeant' Lui Lok, nick-named for the wealth he earned in bribes received during his police employment. In 1975, Tsang Kai-wing arrested by the Independent Commission Against Corruption (ICAC), was sentenced to three years imprisonment for corruption but fled to Taiwan, and an arrest warrant was issued in 1977. Natalis Chan is a long term friend and business associate of Eric Tsang. Chan’s wife, Cecilia Wong, was a director of several companies in the 1990s with Charles Heung Wah-keung, who was identified by the US Senate Subcommittee on Investigations in 1992 as a leader of the San Yee On Triad society.
Qin Hui and US Political Influencing
The US Department of Justice indictment against Qin states that around 2008 a PRC government official provided him with the alias “Muk Lam Li”. Between 2008 and 2019, Qin obtained identification documents for the Li alias, including a Hong Kong identification card, a PRC identification card and a Hong Kong passport, all of which used Qin’s real photograph but contained a different date of birth. The timing of this corresponds with Qin’s ownership of the Heaven and Earth Nightclub in Beijing, and could have involved corruption by the government official or recruitment of Qin as an intelligence agent (or both).
In 2017, Qin used the ‘Li’ alias to wire transfer around $5 million from bank accounts based in Hong Kong to bank accounts based in the US, a portion of which was used to purchase a luxury Manhattan apartment where Qin lived. Qin was charged by the US authorities with making false declarations regarding any prior aliases.
Between December 2021 and December 2022, Qin agreed to pay others who made contributions on his behalf to the campaign committees for a candidate for a New York City-wide political office, a member of the United States House of Representatives for a congressional district in the Eastern District of New York and candidate for a House of Representatives seat in a Rhode Island congressional district. These “straw donors” made approximately $11,600 in contributions on Qin’s behalf, which caused the campaign committees to file false contribution reports with the Federal Election Commission in 2022. A straw donor is a person who illegally uses another person's money to make a political contribution in their own name, which would usually be intended to hide the real donor’s identity.
Although not included in the US Department of Justice charges or indictment, some of the political contributions have been revealed as made to New York City Mayor Eric Adams during his election campaign. As well as Qin’s donations, his former wife, Emma Liu, cultivated a relationship with Mayor Adams. Liu was reportedly identified by the Mayor’s office to serve on the Asian Affairs Advisory Council and also made donations to Eric Adams’ campaign to be elected as Mayor. Liu and Qin reportedly divorced in China in 2021, but continued to share apartments including two penthouses at the Plaza Hotel that Qin purchased for a combined $61.7 million in 2017 and 2019. Emma Liu, whose Chinese name is Liu Duo, hails from Beijing and was crowned as Miss China in 2006.
Qin Hui has been found guilty of fraudulently making financial contributions to several US politicians. His motivation for doing so is not clear, and may involve either self-gain or political advantage. Self-gain is clearly likely as Qin has a long history of involvement in corruption and questionable businesses. Political advantage should not be ruled out as the united front activities by the Chinese Communist Party in the US, and indeed in many other countries, has become so complex and extensive. The fact that Qin had a false identity created by a “Chinese government official” raises concerns regarding whether a PRC government department such as the Ministry of State Security may have any leverage over him. The case of Qin Hui shows us that fraud, corruption and espionage can go together in the Chinese diaspora.