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$400M Securities Swindle Foiled
BROOKLYN, NY – The scheme was elaborate, with China Medical Technologies’ high-ranking officials allegedly swindling unsuspecting investors out of more than $400 million.
A three-count indictment unsealed in federal court in Brooklyn charges Xiaodong Wu, the founder, Chief Executive Officer and Chairman of the Board of Directors of China Medical, and Tak Yung Samson Tsang, the Chief Financial Officer and a member of the Board of Directors, with securities fraud, securities fraud conspiracy and wire fraud conspiracy.
The indictment alleges that Wu and Tsang deceived investors who thought they were putting their money into a NASDAQ-listed medical device company, but ultimately stole the funds and transferred them to entities in China controlled by the duo.
‘As alleged, Xiaodong Wu and Samson Tsang deceived unsuspecting investors who thought they were investing in a NASDAQ-listed medical device company but whose investments were stolen and fraudulently transferred to entities in China controlled by Wu and Tsang,’ said Acting United States Attorney Bridget M. Rohde.
‘The defendants’ scheme defrauded the investing public of more than $400 million,’ added Rohde. ‘Today’s indictment further demonstrates our commitment to protecting investors and to holding accountable those who seek to abuse the financial markets to enrich themselves.’
The indictment details a scheme that spanned nearly eight years, from January 2005 to November 2012, during which Wu and Tsang orchestrated a plan to defraud China Medical’s noteholders and investors through material misrepresentations and omissions.
China Medical issued three series of notes: $150 million of 3.5 percent convertible senior subordinated notes due 2011, $276 million of 4 percent convertible senior notes due 2013, and $150 million of 6.25 percent convertible senior notes due 2016.
Wu and Tsang represented that the proceeds from the note offerings would be used for general corporate purposes, acquisitions and repurchasing outstanding convertible notes, but ultimately transferred most of the funds to entities controlled by Wu, Tsang and their co-conspirators.
‘Wu and Tsang led their victims down a narrow path of deceit,’ said FBI Assistant Director-in-Charge William F. Sweeney, Jr. ‘They betrayed the trust of those who took them at their word, stole their money, and made off with more than $400 million.’
Wu and Tsang are currently fugitives, and their whereabouts are unknown.
Key Facts
- State: New York
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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