On Sunday, the Beijing police announced that Beijing-based assets management company Huayingkailai is suspected of illegal fundraising activities, and 32 suspects, including its chairman Bai Zhiming, have been detained on criminal charges. The news made headlines nationwide because the company has been raising money in the name of developing the Transit Elevated Bus, even though the bus had failed its road test. Southern Metropolis Daily comments:

It was in 2010 that Song Youzhou, the inventor of the elevated bus, first raised the idea of a lane-straddling bus that would allow cars to pass beneath. He said it would ease the pressure on the roads. However, many experts pointed out problems with the idea, such as how it would make turns at junctions, and the possibility of accidents as a result of those driving beneath feeling under pressure.

Therefore the initial enthusiasm for the bus soon cooled. But in 2015, Bai bought the patent from Song and raised the idea again in public, changing its name to Batie. Last August, Bai made a sample bus and publicly tested it on the road, but it could only travel forward, without making any turns. The technological problems remain unsolved and Batie proved a failure.

However, despite that, Bai and his company launched fundraising programs for the bus. They promised an annualized return rate as high as 12 percent, and told investors they would pay the money with the ticket revenue. One does not need to be a financial expert to know how ridiculous such a program is. The bus failed its road test so it could not possibly run on the road within years. The "ticket revenue" Huayingkailai promised was therefore fictitious.

No wonder Huayingkailai was reported to be unable to pay its investors earlier this year, and the police are investigating its fundraising activities. Worse, more media reports show that several companies related to Huayingkailai have been suspected of illegal fundraising.

The case should teach us a lesson: How could they cheat with so simple a lie? Some say it is the high returns that attracted the investors, but there are more reasons than that. First, Bai and his team conveyed the idea that the bus was a high-tech innovation.

Second, some local governments publicized the bus. For example, after Bai signed contracts with the local government of Zhoukou, a city in Central China's Henan province, the government boasted about the bus on its official website, which many investors believed gave the project the government's seal of approval.

It is time to learn the lessons from this. New ideas should be encouraged, but we must be careful not to let illegal fundraisers make use of them.