The CEO and CFO of a medical device company were charged with securities fraud, securities fraud conspiracy and wire fraud conspiracy in a three-count indictment unsealed this week, according to the Department of Justice.
The government claims Xiaodong Wu, founder, chairman and CEO of Bejing-based China Medical Technologies, and Samson Tsang, the company's CFO, defrauded investors of more than $400 million. Between January 2005 and November 2012, Mr. Wu and Mr. Tsang and their co-conspirators made several misrepresentations and omissions related to the use of about $426 million in investments and the transfer of those investments to entities affiliated with Mr. Wu and Mr. Tsang, according to the indictment.
As part of the fraud scheme, Mr. Wu and Mr. Tsang stopped making public disclosures of material events affecting the value of its securities, stopped making interest payments on three series of notes issued by China Medical and caused the company's independent director and outside auditor to resign, according to the DOJ.
Mr. Wu and Mr. 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 U.S. Attorney for the Eastern District of New York Bridget M. Rohde.
China Medical, which manufactured advanced in-vitro diagnostic products, filed for Chapter 15 foreign-firm bankruptcy in August 2012.
The DOJ said both Mr. Wu and Mr. Tsang live in China and are fugitives.
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