| NEW YORK, March 20
NEW YORK, March 20 Two former top executives of
the now-defunct China Medical Technologies Ltd have been
criminally charged in the United State with defrauding investors
out of more than $400 million, U.S. prosecutors said on Monday.
According to a three-count indictment, founder and Chief
Executive Officer Xiaodong Wu, 59, and Chief Financial Officer
Tak Yung Samson Tsang, 46, stole much of the $426 million they
raised in two convertible bond offerings in 2008 and 2010.
Prosecutors said they did this by sending bond proceeds to
entities they and their co-conspirators controlled, rather than
invest it in the Beijing-based medical testing equipment maker
or repurchase existing debt as they had promised.
"Wu and Tsang led their victims down a narrow path of
deceit," FBI Assistant Director-in-Charge William Sweeney said
in a statement. "They betrayed the trust of those who took them
at their word, stole their money, and made off with more than
It is unclear whether the defendants, who live in China,
have hired lawyers, or will go to the United States to face the
securities fraud, securities fraud conspiracy and wire fraud
conspiracy charges. Neither could be reached for comment.
China Medical is one of dozens of Chinese companies whose
accounting and other practices were called into question by
short sellers and other investors early this decade.
Prosecutors said Wu and Tsang shielded their own activity by
causing China Medical's outside auditor and independent director
to resign, ending disclosures of material events, halting
interest payments and refusing to cooperate with liquidators, in
a scheme that ran from January 2005 to November 2012.
The bond issues included a $276 million offering in 2008 and
a $150 million offering in 2010. About $246.5 million and $150
million respectively remain outstanding, prosecutors said.
China Medical filed for protection from creditors with the
U.S. bankruptcy court in Manhattan in August 2012, and was later
placed into liquidation.
The case is U.S. v. Wu et al, U.S. District Court, Eastern
District of New York, No. 17-cr-00144.
(Reporting by Jonathan Stempel in New York; Editing by Lisa