A man who was given a key political role in east China after claiming he bought a US bank that was later found not to exist has been detained for an alleged separate fraud scheme, police and media said.

 Fake Chinese bank magnate detained for fraud

Lin Chunping last November shot to fame in Wenzhou -- a centre for private business in China -- after claiming he acquired the so-called Atlantic Bank of America, an announcement that earned him praise from local officials and media.

He was subsequently appointed to an advisory body to the eastern city's legislature as a reward for managing to break into the US banking market, the Global Times newspaper said Tuesday.

Chinese banks have long sought access to the tightly regulated US market but have faced a series of rejections.

But Lin, 41, quit his position just two months after being appointed as doubts surfaced about the existence of the bank, and the official Xinhua news agency unmasked him for good in March.

On Monday, police in Wenzhou said in a statement that they had caught him and six other people for allegedly defrauding the government of more than 10 million yuan (USD1.6 million) in tax revenues.

In a complicated scheme, Lin issued tax invoices valued at more than 100 million yuan through his companies based on false transactions and then sold them to other firms nationwide to reduce their tax burden, police said.

Authorities detained six of his associates for suspected involvement in the scheme, which reportedly stretched across 22 provinces. Lin's five companies included one that traded agricultural products.

The case is not believed to be related to his earlier false claims of buying a US bank and it is unclear whether Lin has faced any separate action over that issue. Police in Wenzhou could not immediately be reached for comment.

According to the Global Times, Lin disappeared from his native Wenzhou two weeks ago, and police finally caught up with him in the southern province of Guangdong.

He could now face up to 10 years in prison, the report said.

Wenzhou, located in Zhejiang province, was rocked by a financial crisis last year when more than 90 private company bosses fled after being unable to repay crippling debts due to a slowing Chinese economy.

The central government in March unveiled a package of financial reforms to help struggling private firms in the city.