Chinese regulators have accused Evergrande and its founder of inflating revenues by $78 billion, putting the insolvent property developer at the heart of the countrys biggest ever financial fraud case.

The China Securities Regulatory Commission (CSRC) slapped a penalty of 4.175 billion yuan ($580 million) on Hengda Real Estate, the groups main Chinese unit, the company said in filings to the Shenzhen Stock Exchange on Monday.

Xu Jiayin, founder and chairman of the Evergrande Group, was fined 47 million yuan ($6.5 million) for the overstatement and other alleged violations. Formerly Chinas richest man, he was also barred from the securities markets for life.

The findings were revealed after an eight-month-long investigation by the CSRC.

The investigation had previously derailed Evergrandes debt restructuring talks with its overseas bondholders in the fall, because the company couldnt issue new notes, according to a company statement issued in September.

Days later, Evergrande said its chairman had been detained by Chinese authorities on suspicion of crimes. In January 2024, a Hong Kong court ordered Evergrande to liquidate.

In Mondays filing, Hengda said the CSRC accused the company of several violations, including inflating sales in its financial reports, relying on these allegedly falsified figures to sell bonds and failing to disclose relevant information as required.

The regulator said Hengda had fabricated 214 billion yuan ($30 billion) in sales for 2019, which accounted for half of that years revenue. Another 350 billion yuan ($48.6 billion) in sales for 2020, accounting for 78% of revenue, were also falsified.

As a result, 2019s net profit was inflated by 63% and 2020s net profit by 87%, it said.

The alleged fraud, amounting to a total of 564.1 billion yuan ($78 billion) over two years, is the largest ever financial fraud case in mainland Chinas securities markets, according to previous regulatory statements and state media reports.

In addition to the penalties levied on Hengda and Xu, six other executives were fined by the CSRC for being directly responsible.

Like Xu, Xia Haijun, the former vice chairman and CEO of Evergrande Group, was banned from the nations securities markets for life.

Xu Jiayin had made decisions, organized, and implemented the financial fraud ¦ Xia Haijun had organized, arranged and prepared the falsified financial reports¦ their means were really bad and the circumstances were grave, the regulator said. (CNN)