(Yicai Global) Sept. 18 -- Zhang Wei, the actual controller of investment firm China Create Financial Holding Group, has been indicted by the state prosecutor in Shenzhen on 11 counts.

They include organizing and heading a gangster-style organization, permitting drug use, illegally taking public deposits, fraud and extortion, the Shenzhen-based company in a statement yesterday.

Zhang had set up a number of companies since November 2004, including China Create, and controlled them in a way that he owned them or entrusted them to others, the prosecutor said on Sept. 16. Zhang and one Wang Tao led these firms like a mafia organization.

The 88 Wealth Network, an online peer-to-peer lending platform under the group’s control, organized the illegal taking of public deposits to conduct a series of illegal acts, including fraud and extortion. The platform, which wound up in February 2017, had attracted about CNY8.5 billion (USD1.3 billion) in investment and reimbursed about CNY5 billion as of the end of 2018.

China Create revealed early last year that Zhang had been taken away by police to help in their investigation, without giving more details.

“The absence of the actual controller in office will not have a significant impact on the company,” it said at the time.

China Create’s operating revenue fell 0.5 percent to CNY1.7 billion last year, with a net loss of CNY1.2 billion. In the first half of this year, operating revenue totaled about CNY717 million (USD106.1 million), down 13 percent, with profit at CNY27.6 million.

Most netizens interpret Zhang’s indictment as good news for the six-year-old company, and believe state funds may be used to buy the shares Zhang owns, as happened with Kangmei Pharmaceutical. He has a 94 percent stake in China Create.

Shares of China Create [SHE: 002290] fell 0.4 percent today to close at CNY5.06 (75 US cents). The benchmark Shenzhen Component Index rose 1.8 percent.

Editor: Peter Thomas