China Medical Technologies execs indicted for fraud

March 21, 2017 By MassDevice Leave a Comment

(Reuters) – Two former top executives of the now-defunct China Medical Technologies Ltd have been criminally charged in the United States with defrauding investors out of more than $400 million, U.S. prosecutors said on Monday.

According to a 3-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 $400 million.”

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.

Hospital survey reveals front-line needs, desperate measures
Hospitals across the U.S. have begun resorting to unorthodox means of replacing or sanitizing personal protective equipment (PPE) and atypical sourcing of PPE and other supplies needed to fight the coronavirus pandemic, according to a government survey. The Department of Human Services’ Office of the Inspector General (OIG) conducted the random survey of 323 hospitals… […]
CDRH gives medtech manufacturers employee coronavirus safety tips
As certain medtech companies continue ramping up production of devices and components to fight the coronavirus, the FDA’s Center for Devices and Radiological Health (CDRH) on Sunday announced several tips to help protect medtech manufacturing employees from contracting COVID-19. In addition to frequent and thorough hand-washing, maintaining social distancing and avoiding face-touching, the agency urged… […]
Lin Engineering hastens manufacture of DC motors for fight against COVID-19
Lin Engineering — a designer and manufacturer of precision electric motors and motion systems — is prioritizing the production and supply of motors to support companies making medical devices critical in the treatment of COVID-19 patients. Morgan Hill, Calif.-based Lin Engineering said last week its highest priority is supplying motors to the makers of medical… […]
Nortech, Minnetronix may start building ventilators
Two Minnesota medtech contract manufacturers are taking a hard look at producing ventilators, including one from the plans that Medtronic made public last week to address the coronavirus outbreak. Maple Grove-based Nortech Systems (NSDQ:NSYS) told Medical Design & Outsourcing it is seriously considering starting to produce the machines based on the design specifications of Medtronic’s… […]
Materialise touts 3D-printed oxygen mask that could free up ventilators
Materialise announced today that it developed a 3D-printed device to convert standard hospital equipment into a mask to help patients breathe by creating positive pressure in the lungs. The Leuven, Belgium-based company’s Materialise NIP Connector is designed to give clinicians the ability to reduce the time that patients need access to ventilators and relieve the… […]
Plastikos implements bio-contamination testing and compliance under ISO 14698
Plastikos (Erie, Pa.) recently announced that it has implemented a formal bio-contamination testing and compliance system that’s in full compliance with ISO 14698-1 and ISO 14698-2 — a move the company described as paramount amid the COVID-19 pandemic. Plastikos and Plastikos Medical presently mold medical devices and parts within multiple ISO-7 certified cleanrooms. The new… […]
How 3D printing is enabling ventilator splitting
Amid the shortage of ventilators due to the COVID-19 pandemic, researchers are finding success using 3D printing to enable “ventilator splitting.” The search continues to go on for more machines, but there have already been government actions taken to increase amounts, while researchers have taken it into their own hands to create homemade-style ventilators. However,… […]
How R&D departments are coping with coronavirus
Hardly anyone’s R&D workplace has been spared all the repercussions of the COVID-19 crisis. People are working remotely, staggering their hours in laboratories to avoid too many coworkers, and relying heavily on conference calls and video meetings. Our WTWH Media sister site R&D World spoke to a few industry people to see how they’re coping… […]
Europe waives tariffs, import taxes on COVID-19 medtech
The European Commission has decided to waive tariffs and value-added taxes (VAT) on certain medical devices and personal protective equipment (PPE) coming from outside the EU during the coronavirus pandemic. The measure includes testing kits, ventilators and other medical equipment and will remain in force for six months, the commission said today. “In this emergency,… […]
FDA eases mask regulations, seeks to boost decontamination of used masks
The FDA yesterday further relaxed regulations on medical and surgical masks and face shields to ease shortages during the coronavirus pandemic, and invited companies that decontaminate masks to submit proposals for emergency authorizations. In a new guidance, the agency also gave its blessing to healthcare providers to use improvised masks during the public health emergency when… […]
BARDA opens research portal to fight COVID-19
By James Keller, Emergo Group The Biomedical Advanced Research and Development Authority (BARDA), which is part of the US Health and Human Services Office of the Assistant Secretary for Preparedness and Response, is seeking information from stakeholders on available medical countermeasures in development. It is particularly interested in products and technologies that have progressed into… […]