(Bloomberg) -- China Evergrande Group, the defaulted developer at the heart of China’s real estate crisis, falsely inflated revenue by more than $78 billion in the two years leading up to its failure, according to the nation’s top securities regulator.

Evergrande’s main onshore unit Hengda Real Estate Group boosted its 2019 income by about 214 billion yuan ($29.7 billion) by recognizing sales in advance, and another 350 billion yuan in the 2020 annual results, the developer said in a filing Monday, citing a notice from the China Securities Regulatory Commission.

The CSRC laid much of the blame on Hui Ka Yan, the founder and former chairman who allegedly instructed other personnel to “falsely inflate” Hengda’s annual results for those two years. As the supervisor in charge, Hui used particularly “egregious” means, the regulator said. Hengda was also accused of fraudulently issuing a combined 20.8 billion yuan in bonds using these figures in marketing. 

The CSRC fined Hui 47 million yuan for the falsified results and other alleged violations, and banned him for life from capital markets activities, according to the regulator’s preliminary finding. Hengda was fined 4.18 billion yuan. China Evergande’s former Chief Executive Officer Xia Haijun and Chief Financial Officer Pan Darong were among executives also punished by the regulator with fines and market bans.

The allegations mark the latest blow for Hui, once among Asia’s richest tycoons who oversaw a sprawling empire that spanned real estate to electric vehicles. Evergrande was one of China’s biggest developers, taking on massive debt to expand across the country as condo sales boomed. Hui’s empire began to unravel after regulators imposed tight restrictions on borrowing, while an economic slowdown and the pandemic crimped sales.

 

The inflated figures accounted for half of Hengda’s total revenue in 2019, and 79% in 2020, according to the regulator. The developer’s profits were exaggerated by 63% and 87% respectively in those two years, the regulator claimed. Hui was responsible for delays in publishing Hengda’s earnings reports and failures to disclose the lawsuits it faced, as well as unfulfilled debt payments, the CSRC added. 

Read more: Why China Property Giant Evergrande Faces Liquidation: QuickTake

Hui was placed under a type of police control in September, subject to so-called “mandatory measures,” due to “suspicion of illegal crimes.” Caixin reported at the time that Xia and Pan were also being held. No criminal charges against Hui have been made public and his whereabouts aren’t known. CSRC’s measures are civil penalties.

Read More: Evergrande’s Billionaire Founder Is Put Under Police Control

Once Asia’s second-richest man, worth $42 billion at his peak in 2017, Hui has seen his wealth plummet to about $1 billion after the developer defaulted in 2021. Its stock has tumbled and was eventually suspended from trading. The group received a liquidation order from a Hong Kong court in January, marking the largest collapse in the three-year real estate crisis.

Meanwhile, another Hong Kong mansion tied to Hui has been put up for sale. The luxury property, 10E on Black’s Link in the prestigious Peak area, is seeking bidders before a tender ends on April 22, Savills Plc said in an emailed statement. 

Hui and the other accused are entitled to plead defenses before the penalties take effect, the CSRC said. Hengda has waived such rights, the company added in the filing.

--With assistance from Lin Cheng.

(Updates with details of the allegations from fourth paragraph)

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