Tax Evasion Allegations Rock Chinese Tech Sector as Investor Offers $90M Reward
SingTao · 1 SOURCESabout 3 hours ago3 MIN
Summary
Luo Yonghao, the founder of Smartisan Technology and a prominent Chinese internet celebrity entrepreneur, is facing serious accusations of tax evasion from his former business partner. The allegations, filed by Zheng Gang, founder of venture capital firm Zihui Ventures, have ignited a new round of public confrontation between the two former allies. Zheng, who claims to be in Seoul, South Korea, has gone so far as to offer a substantial monetary reward to uncover what he alleges are Luo's financial irregularities dating back 15 years. Luo has swiftly denied all allegations, characterizing them as slander and stating he has preserved digital evidence of the claims. This latest development represents a significant escalation in an ongoing dispute that has already involved lawsuits and public accusations over the past several years.
Key Points
- Former partner Zheng Gang filed a real-name accusation on Weibo on the evening of September 27, alleging that Luo Yonghao and the Hong Kong-listed Jiaoge Pengyou (stock code 1450) operated dozens of shell companies to evade taxes
- Zheng claims Luo used the names of individuals including Jin Wei, Li Jun, Luo Yongxiu, and Huang He to register shell companies, which were subsequently dissolved
- The investor is recruiting law and accounting firms nationwide to audit Smartisan Technology's financial records dating back approximately 15 years, offering up to 30% of an estimated 300 million yuan recovery as compensation, translating to a maximum reward of 90 million yuan
- Luo responded within hours, labeling the accusations as slander, stating he has captured screenshots as evidence and warning that false accusations constitute a criminal offense in China
- By September 28, Luo escalated his counterattack, revealing that Zheng has been designated as a dishonest debtor subject to consumer spending restrictions, and has allegedly exited China illegally
- The core of the dispute involves a 15 million yuan loan, with a second-instance court ruling in June 2025 in favor of Zheng, requiring Luo to pay annual interest at 6%
- Legal experts indicate that if the accusations prove false, Zheng could face civil liability for defamation or criminal charges for false accusations, while Luo could face criminal prosecution if the tax evasion allegations are substantiated
Why It Matters
This case highlights the growing scrutiny on corporate governance and tax compliance among Chinese tech entrepreneurs, particularly those who have transitioned from startup founders to internet celebrities. For Hong Kong investors, the fate of Jiaoge Pengyou as a listed company provides a direct financial stake in the outcome of these allegations, while the broader dispute underscores the risks and complexities of investing in China's tech sector where founder disputes can quickly escalate into public confrontations with significant reputational and legal consequences. The resolution of this case may set precedents for how similar founder-investor conflicts are handled, potentially affecting deal structures and due diligence practices across the venture capital ecosystem in Greater China.
This case highlights the growing scrutiny on corporate governance and tax compliance among Chinese tech entrepreneurs, particularly those who have transitioned from startup founders to internet celebrities. For Hong Kong investors, the fate of Jiaoge Pengyou as a listed company provides a direct financial stake in the outcome of these allegations, while the broader dispute underscores the risks and complexities of investing in China's tech sector where founder disputes can quickly escalate into public confrontations with significant reputational and legal consequences. The resolution of this case may set precedents for how similar founder-investor conflicts are handled, potentially affecting deal structures and due diligence practices across the venture capital ecosystem in Greater China.