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After landmark Sino-US probe, ex-BOC managers and wives are accused of laundering US$485m partly through casinos

Two former Bank of China managers and their wives have been charged by the US government with laundering more than US$485 million embezzled from the bank through Las Vegas casinos and other channels.

The 15-count indictment follows the arrest of the two couples by the FBI  in 2004 for immigration fraud. They were due to stand trial on those charges in a Las Vegas court later this month.

The racketeering, money laundering and fraud charges have added a new twist to the case. They are now charged with being involved in the largest embezzlement in China's history, which saw money being funnelled from the mainland to Hong Kong, Canada and the United States. Investigators from the four jurisdictions have worked together to crack the case.

The latest indictment alleges that Xu Chaofan, 40, and Xu Guojun, 47, former managers of Bank of China's Kaiping sub-branch in Guangdong, were involved in a scheme to defraud the bank of at least US$485 million from 1991 to 2004.

Their wives, Kuang Wanfang and Yu Yingyi, allegedly helped their husbands launder money, obtain false identities and enter the US illegally through sham marriages.

Kuang's brother, Kwong  Wa-po, was also indicted on the charges. He remains at large.

US Assistant Attorney-General Alice Fisher said in a statement that the indictment was a result of extensive co-operation between international law-enforcement agencies.

'We will continue to work closely with our international partners to make sure that the United States is never seen as a haven for criminals to launder the proceeds of their illegal conduct,' she said.

A third Kaiping bank manager who was also involved in the embezzlement, Yu Zhendong , pleaded guilty to racketeering in 2004 and was returned to China last year to face similar charges. He is awaiting sentencing from a Jiangmen court.

Under an agreement between the two countries, the court cannot sentence him to more than 12 years in prison. His wife, who was also charged, is being allowed to stay in the US as part of the plea bargain.

The South China Morning Post reported last year that similar plea-bargain deals were offered to Xu Chaofan and Xu Guojun, but they rejected them. They were offered jail terms of 25 and 20 years, respectively. Xu Chaofan faced  a longer term because he was believed to be the mastermind of the scheme.

This embezzlement case has produced some of the closest co-operation between the mainland and American governments. US officials, FBI agents, prosecutors and lawyers flew to Guangzhou in September to take a deposition from Yu. It was believed to be the first time that the central government had allowed a US deposition to take place on its soil.

The latest indictment alleges that the bank managers created shell companies in Hong Kong to funnel the money out of the mainland. Personal bank and investment accounts also were used. The money was then laundered through Canada and the US.

A 'significant amount' of the stolen money was laundered through casinos in Las Vegas, the Department of Justice statement said.

The indictment also made specific references to financial transactions conducted by the five defendants, including a deposit of US$2 million into a Las Vegas hotel and casino account.

Ling Bing, a law professor at the Chinese University of Hong Kong, said the case would proceed under the US judicial process while the Chinese defendants were still in America.

However, he said it was likely they would be sent back to China and prosecuted on similar charges even if they were acquitted of the charges in the US because they were not legal residents of the US.



US charges 4 over biggest bank fraud