Here is an almost impossibly delightful securities fraud case.
ChinaCast Education Corp is, or was, "a leading post-secondary education and e-learning services provider in China" run by Chan Tze Ngon and Jiang Xiangyuan. It went public in the US in 2006, and was on Nasdaq from 2007 until 2012, when it was de-listed for being very, very tiny and very, very terrible. At its peak, its market capitalisation was over US$200 million; now it is US$4.9 million.
According to the US Securities and Exchange Commission, one reason it got so tiny is that its business model consisted mostly of Chan and Jiang stealing all its stuff. Which is not a great business model for ChinaCast, though I guess it's fine for Chan and Jiang.
After Chan's management group lost control of the board, Chan and other members of that group, including Jiang, transferred ownership of China Cast's three colleges away from ChinaCast by transferring the ChinaCast-owned holding companies that held the colleges first to Jiang and the dean of one of the colleges and then selling them to other individuals.
So, impressive, but the money-stealing is even better.
ChinaCast raised a total of US$43.8 million in its December 2009 public offering. Chan misappropriated US$41 million of the proceeds by transferring the funds from ChinaCast to China Cast Hong Kong, which he secretly controlled, and then moving the bulk of the money to yet another entity outside ChinaCast's corporate structure. Chan directed and engaged in these transactions without seeking or obtaining the approval of ChinaCast's board of directors, and the transactions were not publicly disclosed until ChinaCast's new management caused ChinaCast to file a current report on Form 8-K on December 21, 2012, disclosing, Chan's misappropriation of the offering proceeds.
Here is more on ChinaCast's badness. Here let's just notice a little oddity of this case, which is that it is really only secondarily securities fraud. It's mostly just theft. But the problem facing US regulators is that this is (well, was) a US listed firm, with US investors whose stuff was stolen, but it is not illegal in America to steal stuff from Chinese firms in China.
You can see how this would chafe US securities regulators, but fortunately they found an answer, which is that basically any bad thing you can do at a firm is securities fraud. Because generally speaking, when you do a bad thing, you also don't disclose it, and Chan and Jiang didn't. Stealing US$41 million from your company? Not securities fraud. Signing a 10-K saying that the US$41 million is still there? Securities fraud! So we got them.
It's a good lesson in how securities regulators can use disclosure rules to do substantive regulation: you can't get them for doing the bad thing, but you can get them for covering it up, which is just as good. Or just as useless, as the case may be: Chan and Jiang live in China and seem unlikely to make the trip to the US to let the SEC punish them.