Court confrontation! Jianye employees versus Zhongyuan Trust, default on the 4 million employee-exclusive product!

Recently, the Higher People’s Court of Henan Province published a civil ruling, issuing a final judgment on the retrial case of investor Li Mou versus Jianye (China) Co., Ltd. (hereinafter referred to as “Jianye Group”) and Zhongyuan Trust Co., Ltd. (hereinafter referred to as “Zhongyuan Trust”) regarding trust disputes, dismissing Li Mou’s application for retrial.

This investment dispute, centered around the qualification recognition of “employee exclusive trusts,” trustee obligations, and joint infringement liability, was settled after first and second trials. It also revealed typical details of employee trust payout controversies in the real estate industry.

4 Million Investment in Employee Exclusive Trust Fails

In December 2020, investor Li Mou subscribed to Zhongyuan Trust’s Zhongyuan Wealth Growth Phase 621 - Henan Jianye No. 1 Collective Fund Trust Plan, with an investment of 4 million yuan. This trust plan was an employee-exclusive product of Jianye Group, aimed at serving internal staff, and Li Mou completed the subscription as an employee of Jianye Group.

According to previous media reports, between 2020 and 2022, Jianye Group issued 18 trust financial products through Zhongyuan Trust under the guise of “employee benefits,” raising approximately 1.3 billion yuan. These internal employee trusts typically had terms of 2-3 years, offering expected annualized returns of 11%-13%, far exceeding the yields of ordinary market financial products.

Jianye Group explicitly stated during promotion that the trust principal and income were guaranteed by the actual controller Hu Baosen personally and Jianye Holdings Co., Ltd., providing reassurance to employees.

Internal sources revealed that these trust products were promoted via Jianye Group and Zhongyuan Trust’s official websites. Jianye’s city branches and subsidiaries organized employees to purchase through inducements, task assignments, or even coercion.

In addition to the Zhongyuan Wealth Growth Phase 621 - Henan Jianye No. 1 Collective Fund Trust Plan, other projects included the “Zhongyuan Wealth - Growth Phase 804 - Henan Jianye Series (No. 1) Equity Investment Trust Plan” and the “Zhongyuan Wealth - Growth Phase 493 - Jianye Football Loan Project Collective Fund Trust Plan,” among others. [Just now, Jianye Real Estate’s 1.3 billion “Employee Trust” case was judged, Hu Baosen to personally pay out!]

Subsequently, the underlying assets of these trust plans encountered risks, leading to difficulties in principal and interest repayment. Li Mou was unable to recover his investment principal and remaining income on time. To recover losses, Li Mou sued Zhongyuan Trust and Jianye Group, demanding compensation. Both the first and second courts dismissed his claims. Dissatisfied, Li Mou applied for retrial at the Henan Higher People’s Court, case number (2026) Yu Min Shen 139.

Three Major Disputed Issues in the Retrial: Divergent Statements from Investors and Institutions

During the retrial review, Li Mou submitted new evidence and raised multiple defenses, focusing on three key issues: employee identity recognition, qualified investor review, and joint infringement, engaging in fierce disputes with Jianye Group and Zhongyuan Trust.

Dispute 1: Is there new evidence to overturn the original judgment?

Li Mou argued that the Zhengzhou Intermediate Court had already ruled that Zhongyuan Trust should pay over 846 million yuan for principal, premiums, and damages, with clear and enforceable underlying asset claims, making the recovery of trust funds feasible. Zhongyuan Trust’s refusal to pay the remaining principal and income violated trustee obligations.

Zhongyuan Trust responded that, although it obtained a favorable judgment, the obligor had not yet fulfilled the payment obligation. The company was applying for enforcement and had not yet recovered the trust funds, so distribution to beneficiaries was not yet possible. Their failure to pay was not a breach of trustee duties.

Dispute 2: Was the employee status and qualified investor review compliant?

Li Mou insisted he was not an employee of Jianye Group. He claimed that signing the risk statement was induced by staff and that he did not carefully review the contract, making his declaration of employee status false. He also accused Zhongyuan Trust of merely formal review, not requiring income or asset proof, thus failing to fulfill qualified investor review obligations, constituting misleading or fraudulent conduct.

Zhongyuan Trust countered that: First, employee status was verifiable; Li Mou personally confirmed in the subscription risk statement that he was an internal employee of Jianye (China) Co., Ltd., with full verification by staff during the process. He responded “agree” throughout without objection. From 2021 to 2023, the company regularly distributed trust income to Li Mou, and he never raised any objections regarding his employee status or income calculations, indicating acknowledgment of his subscription as an employee. Second, the review of qualified investors was fully compliant. According to regulations, individuals investing over 1 million yuan are deemed qualified investors; Li Mou’s 4 million yuan subscription met this standard. The company also conducted risk assessments, with Li Mou personally selecting options on investment experience and asset proportion, signing to confirm, and completing risk disclosure and contractual notices, all in line with regulatory requirements. Third, due to the high target return rate of the trust plan, Li Mou actively transferred the large sum of 4 million yuan into the trust account on December 21, 2021, to seize the investment opportunity.

Jianye Group’s simultaneous defense stated that the trust was an internal employee product, with subscription subjects being specific. The employee proof was issued based on the subscription process. Li Mou’s participation as an employee was aimed at obtaining exclusive trust benefits. His denial of employee status during litigation was inconsistent with his initial intent. The company did not engage in false certification or assist in violations, nor was there any infringement fault.

Dispute 3: Does this constitute joint infringement?

Li Mou argued that Jianye Group knowingly issued false proof despite knowing he was not an employee, and Zhongyuan Trust violated procedures by simplifying review, colluding to expose him to high-risk products, constituting joint infringement and joint liability.

Both institutions denied this, asserting that the trust contract reflected Li Mou’s true intent, and investment risks should be borne by the investor. Zhongyuan Trust maintained it managed the trust assets in the best interest of beneficiaries and did not commit infringement. The case did not meet the criteria for joint infringement.

Court Ruling: Dismissal of the Claims

The Henan Higher People’s Court, after review, found that the trust contract was a genuine expression of mutual intent, with lawful and valid content, and was legally established and effective.

The court pointed out that Li Mou signed the risk statement, confirmed his employee status and qualified investor commitments in handwriting, transferred full payment on the signing day, and followed the entire process properly. His claims of being induced or not reviewing the contract lacked sufficient evidence and contradicted the contents of the statement. Moreover, he did not raise any objections to his employee status during the income distribution period, thus bearing the investment risk himself.

Regarding the new evidence, the court clarified that Zhongyuan Trust had obtained a favorable judgment but had not yet enforced it or recovered the trust funds, so it was not yet eligible for distribution. Li Mou’s claim that the trustee breached the contract based on this was unfounded. In summary, Li Mou’s retrial application did not meet the relevant legal requirements, and the final ruling dismissed the retrial request, making this a final and binding judgment.

Judicial Reminder: Collective fund trusts are high-risk financial products. Investors should truthfully disclose their identity and assets, carefully review contract terms, and prudently assess risks. Financial institutions must strictly fulfill legal obligations such as qualified investor review and risk disclosure, clarifying responsibilities to avoid payout disputes. Such employee-exclusive trust products are only issued to specific internal personnel; unauthorized external subscription involves legal risks that individuals must bear.