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Elderly retirees face big losses after Chinese trust goes bust, reflecting turbulent economy

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Elderly retirees face big losses after Chinese trust goes bust, reflecting turbulent economy

CHENGDU, China (AP) — Some investors in a troubled trust fund in China are facing financial ruin under a government plan to return a fraction of their money, casualties of a slump in the property industry and a broader economic slowdown.

Sichuan Trust, headquartered in the southwest city of Chengdu, announced it was insolvent in 2020, stricken by sketchy accounting and failed investments in shopping malls and other projects. A deadline earlier this month to accept a 20%-60% “haircut” or loss on their investments has left some investors in deep financial trouble, according to public announcements and AP interviews with five people affected.

China’s economy, the world’s second largest, depends heavily on real estate development to drive growth and create jobs. Property prices and sales have languished after a crackdown on what leaders viewed as dangerous levels of borrowing, causing dozens of developers to default on their debts.

At the National People’s Congress session in Beijing last week, officials pledged to do more to protect investors. Premier Li Qiang said China would work to control risks and resolve the property crisis.

For the people who put their life savings into Sichuan Trust and similar entities, it’s likely too late. Around 300 of more than 8,000 investors refused to accept a government plan and are looking for legal help, a relative of one investor said. A few who attempted to come to Beijing during the congress to air their grievances were blocked by police, the relative said.

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The ruling Communist Party faces a dilemma: Debt is a problem, but falling home prices lead people to scrimp on spending. That squeezes companies’ sales, so they lay off workers and cut back on investment. The result: slowing growth and less wealth to go around.

Inevitably, someone will end up losing out as China’s debt crisis unwinds, said Tsinghua University finance professor Michael Pettis.

“Nobody wants to absorb the loss. If you assign it to households, you weaken consumption even more,” Pettis said. “It’s got to be assigned. And that’s the political problem.”

Trusts are a cross between a bank and an investment fund. Some advertised their offerings as reliable, high interest government-backed accounts. They’re actually private entities that fund projects like factories and shopping malls. Weak disclosure requirements allowed them to use money from new investors to pay what they owed earlier ones, a set-up somewhat like a Ponzi scheme.

“Financial supervision was relatively loose in the past, so the design of these products, including systems for protecting investors’ rights and interests, had serious issues,” said Zhu Zhenxin, chief analyst at Rushi Finance Institute in Beijing. “If underlying assets of financial products won’t generate enough returns to pay such high interest rates, default is inevitable.”

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The troubles at Sichuan Trust first surfaced when the government began restricting new sales of trust products in 2020. Without revenue from new investors, it couldn’t pay its outstanding debts.

That summer, Sichuan Trust announced it had 25.3 billion RMB ($3.5 billion at the time) in debts it couldn’t repay. The provincial government and banking regulators took control, ousting the management, reorganizing its books and launching an investigation.

Hundreds of investors staged weekly protests outside the company’s headquarters and their losses became a political issue.

In 2021, police detained Sichuan Trust’s majority shareholder Liu Canglong, a mining and real estate tycoon who was once the richest man in Sichuan, a province of more than 80 million people. He is accused of embezzling trust funds.

In December, the trust announced it would return investors’ funds according to a sliding scale of the original investment. The larger the investment stake, the larger the loss.

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That sparked more protests.

“We’re extremely anxious,” one investor who asked not to be named told The AP. “It’s so cruel, the amount of money they’re giving us is so little.”

A person answering Sichuan Trust’s hotline said the company does not take interviews and would not provide comment. Sichuan Trust, the Sichuan provincial government and the China Banking and Insurance Regulatory Commission did not respond to faxed and emailed requests for comment.

The plan to return funds “appropriately favors small and medium-sized investors,” Sichuan Trust said earlier in a public statement, calling it “fair.”

Those protesting fear say they’ve been harassed and intimidated, subjected to police interrogations and threats from their children’s employers. They’ve been barred from leaving Chengdu or, at times, their housing compounds.

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On a recent visit to the company’s headquarters, dozens of uniformed officers, half a dozen police vehicles and an empty bus were parked outside. More than a dozen plainclothes agents who refused to identify themselves followed two AP journalists around.

Earlier, a Dutch journalist was shoved to the ground and forced into a police vehicle when he attempted to approach protesting investors.

“They abduct you, they threaten your children,” said another investor, who also did not want to be identified due to fears of more police harassment. “They have so many dirty tricks.”

Analysts say investors were bound to suffer big losses given the size of Sichuan Trust’s debts. Chinese media have reported on the problem, but focused on alleged wrongdoing by those who ran the trust, presenting the repayment plan as a fair solution.

Some of the more than 95% of investors who signed off on the plan said they agreed under duress and were threatened with bigger losses if they didn’t meet a March 5 deadline.

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Trusts have a high minimum investment — for Sichuan Trust it was generally 300,000 yuan ($42,000) — and many people believed mostly the relatively well-off were affected.

However, some investors were retirees who said they met the investment threshhold by collecting money from friends and relatives who now want their money back. For them, Sichuan Trust’s default is a calamity.

“They’re so poor, they don’t have money to spend,” said a relative of investors who lost money to the trust. “They don’t have money for medical treatment. They have to borrow money to survive.”

Those interviewed said the name Sichuan Trust led them to believe it was a trustworthy financial institution like a bank, with a steady, fixed interest rates, rather than a risky investment fund. They were attracted by the 8% or 9% interest rates it promised – multiple times higher than traditional savings accounts. Some financially unsophisticated retirees invested large chunks of their life savings.

“The country said trusts are very safe, like banks,” one of the people said. “We didn’t think there would be problems.”

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Instead of enjoying their retirements, two of the people said, they’ve had to borrow money from relatives and cut back on their expenses.

“We ordinary people are miserable,” another investor said. “The corruption is so serious.”

China’s roughly $3 trillion trust sector is part of a large “shadow banking” industry in the country, which for decades supplied credit to entrepreneurs and households not served by the state-run banking system. Concerned over speculation and illegal practices, authorities have tightened controls. In 2020, regulators declared victory in cleaning up China’s online peer-to-peer lending industry, or P2P.

Wealth management companies also have gotten into trouble.

“We believe risks could increase, potentially affecting more financial-sector entities, if China’s economic recovery continues to lose momentum and the property sector’s distress is sustained,” Fitch Ratings said in a report after the collapse of another big trust company, Zhengrong.

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Officials and analysts say crackdowns have been necessary, but investors footing the bill are questioning how they’ve been carried out.

“I support the Communist Party very much,” one of the investors said. “But some people are blackening the Party’s name.”

___

AP Business Writer Elaine Kurtenbach contributed to this story.

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Paramount’s Jeff Shell Accused in Lawsuit of Leaking UFC, WBD Info

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Paramount’s Jeff Shell Accused in Lawsuit of Leaking UFC, WBD Info

A professional gambler and FBI informant has made good on his threat to take legal action against Paramount Skydance president Jeff Shell, as attorneys for Robert “R.J.” Cipriani have filed a 67-page complaint against the media exec in Los Angeles County Superior Court.

Among the allegations Cipriani has brought against Shell are breach of oral contract and fraud, charges related to a reformatted Spanish-language TV show that never got off the ground. The court document claims that Shell broke “a clear promise to help [the] plaintiff develop an English-language version” of Roku Channel’s four-part series Serenata de las Estrellas, which was co-produced by Cipriani in 2023.

Cipriani is suing Shell for $150 million in damages.

“This case arises from the oldest form of fraud: A powerful man took everything a less powerful man had to offer, promised to repay him, lied to him when he asked about it and then refused to compensate him at all,” the second paragraph of the complaint states.

Cipriani claims he had provided Shell with what amounts to 18 months of “sophisticated, high-value crisis communications services,” all of which went uncompensated. Shell allegedly agreed to develop Star Serenade, an adaptation of Serenata, in exchange for these services, but did not follow through.

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The legal document also includes allegations that Shell had disclosed sensitive information about the Paramount’s bid to acquire the Warner Bros. Discovery assets. Cipriani states that Shell in a Feb. 2 meeting had told him that PSKY “intended to enhance and ‘sweeten’ its pending hostile tender offer … to $30 per share in cash,” information that was not made public until Feb. 10. (Cipriani claimed that Shell during that same meeting referred to WBD CEO David Zaslav as a “suck-up.”)

Cipriani went on to state that Shell told him, “We’re paying way too much for Warner Bros. If we could just wait another year, we could get it a whole lot cheaper.”

Paramount and WBD formally entered a $111 billion merger agreement on Feb. 27. Should the deal be met with regulatory approval, the combined CBS Sports/TNT Sports portfolio will bring the rights to the NFL, NHL, MLB, college football, the UFC, the Masters and March Madness under one roof. Shell did not participate in the briefing Paramount convened with analysts the following Monday.

A few pages deeper into the complaint, Cipriani stated he had filed a complaint with the Securities and Exchange Commission related to disclosures Shell had made to him regarding the then-pending $7.7 billion Paramount-UFC deal. Cipriani claims Shell told him about the pact 26 days before it went public. Shell is said to have shared details of the negotiations with Cipriani despite the fact that “even UFC president Dana White did not yet know of the transaction.” (Oddly enough, Cipriani’s complaint alleges that Shell characterized the talks as “very hush hush” while he was spilling the beans.)

The legal complaint includes a screen shot of what appears to be a WhatsApp conversation between Cipriani and Shell, in which the latter states, “We are buying ALL of the UFC rights for the next 7 years for Paramount.”

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When a draft of Cipriani’s complaint began circulating last month, an attorney representing Shell said the document was “riddled with clear errors of fact and law.” With the complaint now filed, Shell will have to opportunity to formally rebut Cipriani.

Shell is currently the subject of an internal Paramount investigation related to Cipriani’s claims and is expected to remain on the sidelines until the inquiry is complete. That said, no official action has been taken, and he remains on the job as of Tuesday afternoon.

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Cuban activist to Trump: ‘Make Cuba great again’ by ending communist rule

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Cuban activist to Trump: ‘Make Cuba great again’ by ending communist rule

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As Cuba faces rolling blackouts, food shortages and renewed protests, Cuban human rights activist Rosa María Payá is warning in an interview to Fox News Digital that the island’s deepening crisis cannot be solved with economic reforms alone and is urging the United States to maintain pressure on the communist government in Havana.

The recent outages and shortages are tied to Cuba’s worsening energy and economic crisis. 

A recent nationwide blackout was triggered by a failure at the Antonio Guiteras thermoelectric plant, the island’s largest power station, cutting electricity across much of the country, according to Reuters. The crisis has been compounded by fuel shortages after the Trump administration moved to curtail oil shipments to the island, particularly from Venezuela — one of Cuba’s main suppliers. 

Cuban officials say U.S. sanctions have worsened the country’s economic difficulties, while repeated power plant failures and an aging electrical grid have left millions facing prolonged blackouts that have fueled growing public frustration and protests.

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The state-run company blamed U.S. sanctions in an official statement, saying, “Without ending the financial blockade, there can be no permanent energy stability,” according to CubaHeadlines.

Rosa Maria Paya, daughter of late Cuban dissident Oswaldo Paya, is seen during a tribute to her father’s memory in Santiago, Chile, April 17, 2017.  (Ivan Alvarado/Reuters)

The Trump administration has increased pressure on Cuba in recent months, tightening sanctions and targeting oil shipments that help power the island’s energy system. The measures are part of a broader effort to weaken the Cuban government and support democratic change on the island. 

“To President Trump, it’s important for you to know that the Cuban people are grateful for what this administration is doing and that we are ready, and we want to make Cuba great again,” Payá said, addressing him directly. “And that means an end to the communist dictatorship, not just a new economy, but a new republic.” 

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Her appeal comes as Cuba has re-emerged in Washington’s foreign policy discussions. Secretary of State Marco Rubio, the son of Cuban immigrants and one of the most prominent Cuban–American voices in U.S. politics, long has advocated a tougher stance toward Havana and stronger support for pro-democracy movements on the island. 

The Trump administration recently has increased pressure on the Cuban government, including measures targeting oil shipments that help sustain the island’s struggling energy sector. 

Trump praised Rubio during a press conference Tuesday and suggested he could play a central role in any potential negotiations with Havana.

“Marco Rubio is doing a great job,” Trump said. “I think he’s going to go down as the greatest secretary of state in history. They trust Marco.”

“We want to work with President Trump and with Secretary Rubio, the opposition is united,” Payá said. “We have a plan. It’s called the Freedom Accord,” she added, referring to a democratic transition framework promoted by opposition groups in Cuba. “We are ready to lead this process. The moment is now, Mr. President.”

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Opposition groups have developed the Freedom Accord, a political roadmap for democratic change, which she says would guide a transition away from the current system in Cuba. 

Payá, 37, who escaped the country 13 years ago, has spent the past decade advocating internationally for democratic change in Cuba. 

She is the daughter of prominent dissident Oswaldo Payá, founder of the Christian Liberation Movement and architect of the Varela Project, a petition campaign in the early 2000s that gathered more than 25,000 signatures demanding free elections and civil liberties in Cuba.

Her father died in 2012 alongside fellow activist Harold Cepero in what Payá describes as an assassination by the Cuban regime. Cuban authorities said the men were killed in a car crash in eastern Cuba, but the Inter-American Commission on Human Rights later concluded there were “serious indications” that Cuban state agents were involved in the deaths.

“After the Cuban regime assassinated my father … I have been trying to follow his legacy together with many, many other Cubans on the island and in exile that today believe that we have a real chance and freedom,” she said, describing a movement that today includes activists both on the island and in exile.

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FLORIDA LAUNCHES PROBE AFTER CUBA KILLS 4 ABOARD US-FLAGGED SPEEDBOAT NEAR KEYS

Members of the “Ladies in White” opposition group march beside the funeral procession of Oswaldo Paya, one of Cuba’s best-known dissidents, in Havana, July 24, 2012.  (Reuters)

The crisis inside Cuba has reached a level where basic survival has become a daily struggle for many families, according to Payá.  

“The situation today is that mothers don’t know if they are going to be able to feed their child tonight,” she said. “Most of the island has been suffering blackouts that last for days on many occasions.”The island has experienced waves of unrest in recent years driven by economic collapse and political repression. 

The largest demonstrations against the regime erupted on July 11, 2021, when thousands of Cubans took to the streets across the island chanting “freedom” in the biggest protests since the 1959 revolution.

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Authorities responded with mass arrests and prison sentences for many demonstrators. 

For Payá, those protests reflected something deeper than economic frustration.

“The Cuban people have been fighting for freedom for the last 67 years,” she said. “We are demanding political freedom, not just a new economy.”

Despite comparisons between Cuba’s crisis and the political turmoil in Venezuela, Payá argues the situation in Cuba is fundamentally different. 

“Cuba’s situation is quite different,” she said. “This is the longest running communist dictatorship in the Western hemisphere.” 

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MARCO RUBIO EMERGES AS KEY TRUMP POWER PLAYER AFTER VENEZUELA OPERATION

Cuban exiles block the Palmetto Expressway at Coral Way in support of protesters in Cuba in 2021 in Miami.  (Pedro Portal/Miami Herald via AP)

While she emphasized that Cubans themselves must ultimately drive political change, Payá said international pressure remains essential because of the regime’s ability to repress dissent.

Her appeal comes as Cuba has re-emerged in Washington’s foreign policy discussions.

Payá said the Cuban opposition hopes the United States will continue supporting democratic change on the island.

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Anabel Oliva, 20, speaks outside the University of Havana during a protest against disruptions in classes due to energy and internet shortages, amid U.S. sanctions and an oil blockade that have deepened the country’s crisis, in Havana, Cuba, March 9, 2026.  (Norlys Perez/Reuters)

“I believe that President Trump knows very well, better than anyone, the difference between a real deal and a better one,” she said. “He understands that this dictatorship must end.”

“To end the crisis,” she added, “we need to end the regime.”

Fox News Digital reached out to the White House and Rubio for comment and has not yet received a reply. 

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Reuters contributed to this report.

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Israeli air strike targets building in south Lebanon

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Israeli air strike targets building in south Lebanon

An Israeli air strike has heavily damaged a building in southern Lebanon’s Tyre district.

An Israeli air strike has heavily damaged a building in southern Lebanon’s Tyre district as Israeli forces continue to attack across the area. The army says it is targeting Hezbollah military infrastructure and has warned residents south of the Litani river to leave.

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