- Benjamin Wey helped bring Chinese companies to U.S. markets
- Wey charged in scheme to get stake in companies and pump stock
Benjamin Wey, who made a career of bringing Chinese companies onto U.S. exchanges, was indicted for fraud in connection with three reverse mergers.
Wey is accused of using family members to help him secretly amass ownership of large blocks of stock in companies he took public and then manipulate the price of their shares. Prosecutors claim he was aided in the scheme by a broker in Switzerland, Seref Dogan Erbek, who was also charged Thursday.
The founder of New York Global Group was recently found liable in an unrelated lawsuit claiming he sexually harassed a Swedish intern, Hanna Bouveng, and then falsely smeared her as a prostitute and drug addict. A Manhattan jury in June awarded Bouveng $18 million.
The 43-year-old was arrested at 6 a.m. and charged with securities fraud, wire fraud, conspiracy and money laundering in an eight-count indictment unsealed Thursday in Manhattan federal court. He was released on $10 million bond, to be secured by $2 million equity in his Sag Harbor, New York, home. Under a bail package agreed to by both sides, Wey will be subject to home confinement and electronic monitoring. David Siegal, Wey’s attorney, declined to comment on the charges outside court.
Erbek, a resident of Switzerland, is not in custody, according to a statement from the office of U.S. Attorney Preet Bharara in Manhattan. The most serious securities fraud charge against the two men carries a top sentence of 25 years in prison.
Wey and Erbek were also sued by the U.S. Securities and Exchange Commission. Also named in the suit are Wey’s wife and sister and two lawyers the agency claims aided the fraud.
Prosecutors claim that from 2007 to 2011 Wey used relatives in China and the U.S. to help him secretly gain control of large blocks of stock in companies he took public through reverse mergers with U.S. shell companies. He then made tens of millions of dollars by manipulating the companies’ stock prices, according to the charges.
Reverse mergers involve a closely held firm that buys a shell company already public on an exchange, allowing it to list shares without the scrutiny of a public offering.
The indictment unsealed Thursday charges Wey in connection with the reverse mergers of three Chinese companies: SmartHeat Inc., which makes heat exchangers, Deer Consumer Products Inc., a maker of small kitchen appliances, and CleanTech Innovations Inc., which makes windmills.
Wey’s 40 Wall Street office was raided by the Federal Bureau of Investigation in 2012.
Among the companies Wey helped enter the U.S. market was AgFeed Industries Inc., which raised more than $100 million from 2007 to 2009 and filed for bankruptcy in 2013. A U.S. trustee called the AgFeed operation a “massive fraud” in bankruptcy court.
The case is U.S. v. Wey, 15-cr-00611, U.S. District Court, Southern District of New York (Manhattan).
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