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  • Jul 30, 2014
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Ex-Xinhua Finance CEO Loretta Fredy Bush signs plea deal

PUBLISHED : Thursday, 24 January, 2013, 12:00am
UPDATED : Thursday, 24 January, 2013, 4:58am

The former chief executive of Xinhua Finance, accused of joining a US$50 million insider trading scheme, signed a plea deal with prosecutors resulting in a single charge of conspiring to obstruct the United States Internal Revenue Service.

Loretta Bush and two other former Xinhua board members, Shelly Singhal and Dennis Pelino, also agreed to enter pleas next month, according to a filing by prosecutors in Washington.

In 2011, the three pleaded not guilty to charges of conspiracy, mail fraud and making false statements.

"Consistent with those plea agreements, the government is filing concurrently a one-count superseding information charging each defendant with conspiracy to impede the lawful functions of the Internal Revenue Service," assistant US attorney Michael Atkinson wrote in papers notifying the court of the deal.

The insider trading scheme is not mentioned in the criminal information. The document instead alleges that Bush, Singhal and Pelino conspired to hide from the IRS US$3.5 million in loans from a company created at the direction of a co-conspirator.

The loans were later "abandoned", according to the filing.

Xinhua Finance, the first Chinese company listed on the Tokyo stock exchange, provides information products focused on Chinese and international financial markets.

The three defendants were indicted on May 10, 2011, for allegedly using various entities to disguise the sale of shares in Shanghai-based Xinhua from the Securities and Exchange Commission and investors, and to engage in insider trading. They were also accused of manipulating the company's balance sheet to avoid taking so-called impairment charges.

The filing of a criminal information in a pending case signalled a resolution with the government and that remaining counts of an indictment would be dismissed, said Bernie Grimm, a criminal defence lawyer who is not involved in the case.

"Given the core of this case was insider trading, it sounds like they're walking away with much less," Grimm said.

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