As lending company Huayingkailai Asset Management Co Ltd, the major investor in the transit elevated bus project, is suspected of illegal fundraising amid the suspension of the high-profile project, experts are raising concerns over fraudsters luring unsuspecting investors with false promises of huge returns from innovative and entrepreneurial projects.

The company, a subordinate of Huaying Group, turned out to be a peer-to-peer financial management company illegally collecting funds for a project supposedly aimed at solving traffic congestion.

The TEB is a double-decker bus that holds up to 300 passengers on its upper level and allows vehicles of a height of less than two meters to run below it.

"The fraud is a typical case of a Ponzi scheme." claimed Shen Meng, director of Chanson & Co, a boutique investment bank.

"By luring investors with promises of high returns, Huayingkailai succeeded in collecting money directly from investors with no risk assessment capacity."

He indicated that with Internet finance being continually upgraded, financial fraud is taking on more flexible and deceptive forms.

"Driven by public enthusiasm for entrepreneurship and innovation, the project simply acted as a means to extract money from gullible investors," Shen alleged.

In addition, investors' lack of experience also accounts for the frequent occurrence of these financial fraud cases.

"The technology applied in the project is still at its testing stage and the feasibility of the project is not high, meaning that it actually ought to have been a venture capital investment project, which would be totally unsuitable for ordinary investors," Shen said.

On July 2, 32 staff from Huayingkailai, including its CEO Bai Zhiming, were reportedly detained by Beijing police, putting an end to the controversies, which attracted attention worldwide after being displayed at the Beijing International High-Tech Expo in May 2016.

Concerns had been raised on the vehicle's feasibility and safety after it was unveiled by its inventor Song Youzhou, with critics pointing out that it was too large and heavy for Chinese roads and could not let higher vehicles pass under it.

"Innovative projects should be supported by the government," said Yang Weidong, a professor at the China National School of Administration, "but feasibility and risk testing is a must before this can take place. The government should shoulder the most significant role in supervision, and then the public."

Following reports questioning the project and its financing, the test road for the TEB was dismantled by the local government of Qinhuangdao in Hebei province at the end of June, and its developer, Huayingkailai, which failed to fulfill its promised high returns to investors, was suspected of conducting illegal fundraising in the process of promoting the TEB.

Some investors gathered in front of the company's office after the news that the suspects had been detained was released by Beijing police, hoping to get money back.

"They promised us that we would get a 50 percent return on our investments by the end of the year." said an angry middle-aged female investor who declined to be named.

Zhuang Qiange contributed to this story