One scheme involved Guangdong Province shell companies that police say sold fraudulent tax invoices, and the other centered on a popular shoe manufacturer accused of tax evasion.

The Guangdong operation used seven shell companies in Shanghai to issue false value-added tax invoices to help some 100 other firms dodge taxes totaling more than 7 million yuan, according to authorities.

Four suspects in a crime ring allegedly headed by Zheng Tingda, 29, of Guangdong's Chaoyan City, were arrested in March, Shanghai police reported yesterday.

Prosecutors said Zheng established Shanghai Duoqi Trade Development Co. and six other companies in 1998. During the following two years, he, his wife and two nephews issued more than 2,000 value-added tax invoices in amounts totaling 123 million yuan.

"Zheng's companies didn't do any actual business," said Yang Weiping, captain of the Luwan District financial crime investigation team. "Instead, they made money from producing the invoices for other companies and charging them 2 to 3 percent of the total."

Police estimated that Zheng earned some 5 million yuan over the two years.

"This was a new type of case for us," said Shen Jie, captain of the city's financial crime investigation team.

The other tax case involved Shanghai Jianni Co., a shoemaker that claimed its product can help people lose weight through its acupressure-type effects.

The shoes have been a big hit since they were put on the market in 1998.

Acting on a tip that the company was not filing truthful tax reports, authorities went to the shoe factory to investigate.

Police say two guards beat tax officials to keep them from investigating, which promoted an all-out search of the company's facilities.

Investigators later determined that the company's revenues last year were not 30 million yuan as reported but 100 million yuan.

Wang Zhi, the company's legal representative, was arrested and two executives of the firm are being sought.

(Eastday.com 08/15/2001)