Lin Chunping, a Wenzhou entrepreneur who fabricated a story about purchasing a US bank, is being sought by police on suspicion of illegally issuing value-added tax invoices.

"Police have confirmed that Lin has fled the city," said Zhang Xunting, deputy director of the information office of the city government of Wenzhou, Zhejiang province.

Local police believe the 42-year-old Lin was involved in requesting several companies under his control to illegally issue value-added tax invoices to cheat tax authorities of export tariff rebates, according to Xinhua News Agency.

Lin's investments include agriculture, leather processing, mining and international trade, Xinhua said.

Lin became well-known across the country after he claimed to have acquired the Atlantic Bank of America for $60 million in June 2011, only to have some netizens in February accuse him of lying to the public.

A netizen with the name Suanle Suanle was the first person who tried to show that Lin had made up stories about his life and education experiences.

"I've done a quick search on the official website of the Office of the State Bank Commissioner in Delaware, where Lin claimed his bank was located, and failed to find Lin's bank on the list of updated banking facilities," said Suanle Suanle in a post on club.kdnet.net.

The netizen added that the name of Lin's bank could not be found on several authorized banking related websites in the United States.

The post doubting Lin's bank was forwarded by thousands of netizens, and the acquisition in Delaware proved to be false after an investigation by Xinhua.

Lin later apologized for making up his story and told a news conference on March 13 that he was still trying to buy foreign banks.

Sources close to Wenzhou police told the Securities Times that the investigation into Lin's businesses began right after his bank-acquiring lie was exposed.

Lin's case may deal a new blow to Wenzhou's small businesses, which have already been trapped by the aftermath of the financial crisis and the meltdown of the city's once prevalent shadow lending.

"What Lin had done has brought down the reputation of businesspeople in the city," said Zhou Dewen, chairman of the Wenzhou Small and Medium-sized Enterprises Development Association.

Many businesses in Wenzhou have had liquidity problems since October because of the country's tightening economic policies and the slowdown in global markets.

The city's huge underground banking industry nearly collapsed after more than 90 companies closed, and several suicides by business owners have occurred since September.

Since then, a series of cases related to illegal private lending activities have been filed and investigated by local police.

Contact the writer at [email protected]