U.S. District Judge Laura Taylor Swain ruled today that Chan Ming Fon, a citizen of Taiwan who lives in Singapore, may be released on a $5 million bond to be secured with $1 million cash and $4.5 million in properties located in the U.S., Japan and Singapore. He was arrested Dec. 20 in Los Angeles.
Chan, who was indicted Jan. 17, is charged with one count of conspiracy to commit wire fraud for allegedly helping the Tokyo-based maker of cameras and medical equipment hide losses from investors and regulators. Assistant U.S. Attorney Bonnie Brooks Jonas told Swain today the government plans to add more charges, including money laundering. Chan faces as many as 20 years in prison on the conspiracy charge.
Olympus in 2011 restated five years of earnings and took a $1.3 billion cut in net assets after the company admitted it paid inflated fees on takeovers and overpaid for three companies to conceal past investment losses. In September, three former Olympus executives including ex-Chairman Tsuyoshi Kikukawa pleaded guilty to their roles in the accounting fraud.
The losses at Olympus were exposed by Michael Woodford a few months after he was appointed as the company’s first non- Japanese president in 2011.
Chan’s lawyer, Christine Chung, told Swain today her client testified in Singapore, most recently in September, in a Japanese inquiry into the Olympus scandal.
Chan appeared in court today wearing tan jail fatigues and sneakers. He was led away after the hearing to be returned to a U.S. jail where he’ll remain until he’s able to satisfy the conditions set by Swain for his release.
Chung said her client was unaware that Olympus was using complex transactions to try to hide its liabilities. She said Olympus executives told the company’s bankers they were making investments and trying to conceal them from competitors.
“He’s not in any way, shape or form a major player,” Chung said.
Chung told Swain today that her client traveled to Los Angeles on Dec. 17 with his family on vacation, the first time in 16 years he’s been in the U.S. Agents didn’t arrest Chan immediately, she told Swain. Instead, they staked out his sister’s Los Angeles home and approached Chan there, saying they wanted to discuss his immigration status, according to Chung.
Chung said agents questioned Chan for more than five hours over two days, arresting him on Dec. 20 after he made statements the government claims constituted a confession.
Chung told Swain she plans to seek to have Chan’s statements thrown out.
“We have a strong, strong objection to the use of these tactics,” Chung said. “We plan to challenge the voluntariness of the statements he made.”
Chung told Swain that Chan has $500,000 available to buy or rent a place to live in New York. His wife, who was in the courtroom today, has made a bid on an apartment, Chung said.
Swain, who agreed to a bail package proposed by Chung, said Chan must remain in New York and wear an electronic ankle bracelet to ensure he doesn’t leave his home.
Jonas argued against bail, claiming Chan presents a risk he will flee. She said he’s adept at moving funds overseas and has a “capacity for deceit.”
“He created phony documents and confirmation letters designed to thwart auditors’ inquiries” related to Olympus, she said.
Prosecutors claim that from 1999 to 2010, Chan conspired to help Olympus hide hundreds of millions of dollars in liabilities, creating phony documents to mislead the company’s outside accountants. They claim he was paid $10 million for falsely certifying he was placing money for Olympus in low-risk investments, which included Japanese government bonds.
Swain set Feb. 14 for the next court appearance in the case.
The case is U.S. v. Chan, 13-CR-52, U.S. District Court, Southern District of New York (Manhattan).
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