Liu sued Shanghai LTGold Co, claiming the Shanghai-based company cheated him by offering fake information, at the court in Huangpu District in August.

Top officials with LTGold have been arrested by police over the firm's involvement in fake registered capital and illegal businesses such as fake advertising, said the plaintiff's lawyer who has seen court documents.

The court sent the lawsuit to police after finding that it was a criminal case as well as a civil case, said Ni Linghua, Liu's lawyer.

Liu has asked the company to pay him back his 170,000 yuan (US$21,520) deposit with LTGold.

Liu signed an agreement with LTGold to allow it to act as Liu's agent for gold trading and deposited the money at LTGold in May.

However, LTGold asked Liu to sell all the positions Liu held. The request made Liu doubt LTGold's credibility. Liu filed the suit after Liu found the company was making illegal business, Liu said in the indictment.

Ni said the money scammed by LTGold may top 100 million yuan as the company has branches in 30 major cities in the country.

LTGold claimed to be a member of the Shanghai Gold Exchange, a claim which turned out to be false.

Tong Gang, a Shanghai Gold Exchange official, said LTGold was never a member of the country's gold bourse.

"LTGold was only a client of one of the bourse's members and had no right to offer gold trading agent services to investors," Tong said.

According to a document from the Shanghai Industrial and Commercial Administrative Bureau, LTGold's business scope did not include gold trading.

Gold futures trading has been banned in China since 1994.

The Shanghai Gold Exchange is China's sole precious metals bourse, offering spot and forward gold trading and spot platinum trading.

LTGold rented plush offices on Yan'an Road E.

Police in Huangpu District said they could not comment as the investigation was still ongoing. Phonecalls to LTGold went unanswered.

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