(Yicai Global) Sept. 2 -- Zendai Group founder Dai Zhikang handed himself in to Shanghai police last week after the operator of peer-to-peer lending platforms came under suspicion of illegal fund raising.

Dai, who is also the Shanghai-based company's general manager and legal representative, admitted that Zendai engaged in such illicit acts as pooling and misappropriating funds, which it cannot repay to investors, the police said yesterday. Investors can register as victims through the police's official WeChat account, the statement added.

The police have also taken compulsory measures against 41 persons and seized assets involved. Compulsory measures under Chinese law comprise bail, house arrest, temporary detention and remand.

Laocaibao, a P2P lender under Zendai, has fallen prey to the problems that have overwhelmed the troubled sector in recent years. Zendai, which had received no government authorization, illegally took deposits from unknown members of the public through Laocaibao and branches of its brick-and mortar Zendai Asset Management, the still-ongoing investigation shows.

Both Zendai Investment Consulting and Laocaibao are lending platforms of Zendai Creative and Cultural Development, police said in the statement. Zendai Creative and Cultural Development does business as Zendai Group. All funds are case-involved money and the borrowers must still discharge their repayment obligations, the police added.

Founded in 2011, Zendai Investment Consulting has about 125 subsidiaries in over 70 cities across China and managed up to about CNY6 billion (USD838 million) in assets in 2017, data show. Laocaibao's outstanding loans, totaling CNY29.6 billion since its establishment five years ago, stood at CNY5 billion in July this year.

Laocaibao has stopped making loans and Zendai's investment division, which steered customers to the platform, has let staff go, financial media Caixin reported.

Shanghai Zendai Aite Financial Information Service, which runs Laocaibao, is a unit of Zendai Group, a company controlled by former fund manager and real estate developer Dai. Laocaibao, which matches lenders with borrowers, does not use its own funds for loans.

Editor: Ben Armour