How Xijian Zhou, An Unknown Chinese MLM Promoter, Made $5 Billion In A Matter Of Months

 

I’m a staff writer on Forbes’ investing team, where I cover banks, asset managers and corporate mergers. I’m on the lookout for the next big thing being pitched on Wall Street and I like to delve into the stories and stocks that investors missed. I’m a graduate of Middlebury College and the Columbia University Graduate School of Journalism, and I’ve worked at TheStreet and Businessweek. Before becoming a financial scribe, I was a part of the fateful 2008 analyst class at Lehman Brothers. Email thoughts and tips to AGara@forbes.com. Follow me on Twitter at @antoinegara, on Facebook at AntoineGaraForbes and on Google Plus at +AntoineGara.

If you think Mark Zuckerberg’s path to becoming a billionaire was fast, consider the case of Xijian Zhou, a 39-year Chinese investor who apparently turned a few hundred thousand dollars into $5 billion in a matter of a few months.

In March 2013,  Xijian Zhou a director at a Nanjing, China-based multi-level marketing firm paid $306,680 for an 82% controlling stake in a Nevada registered firm called Advento, Inc. that “intended to commence operations in the distribution of shower cabinets.” He subsequently conducted a 300-to-one reverse stock split and renamed the company Joymain International Development Group, with a plan to develop healthcare related consumer products.

Twenty-seven months later, his 750 million Joymain shares are worth in excess of $5 billion on paper after trading up nearly 10,000% through 2015 on over-the-counter markets in the United States.

In the annals of billionaires made rich overnight by the soaring shares of thinly-traded penny stocks, Zhou’s fortune ranks high. However, it also revives serious questions about the Securities and Exchange Commission’s oversight of OTC stock trading and, in particular, China-based firms with hard to track management and board teams, in addition to scores of related parties transactions and insider share deals.