Fraud charges against New York-based financier Benjamin Wey over Chinese 'reverse mergers'
Financier allegedly used Chinese companies seeking to raise US capital
A sharp-suited multimillionaire has been charged by US authorities with securities fraud over deals to list Chinese companies in New York that allegedly netted him tens of millions of US dollars in illegal profits.
Benjamin Wey, 43, the head of New York Global Group, was arrested on Thursday.
US Justice Department prosecutors charged Wey and his Swiss-based banker, Seref Dogan Erbek, with conspiracy, securities fraud and other crimes.
Through a Beijing-based subsidiary, prosecutors said, Wey offered to help Chinese companies raise US capital by arranging reverse mergers, in which the Chinese companies took control of the US shell companies that were already publicly listed.Wey got the companies listed on Nasdaq by fraudulently inflating the number of shareholders and hiding his ownership interest from the exchange, authorities said.
The companies were Smart-Heat, Deer Consumer Products and CleanTech Innovations, the indictment said.
Wey manipulated the stock prices by causing two brokers to solicit customers to buy shares while discouraging sales, the indictment alleged. Wey later sold out for a profit, prosecutors said.
Complaints against Wey go back at least four years. New York hedge fund manager Jon Carnes told the South China Morning Post he filed whistleblower complaints against Wey with US regulators in 2011.