Two Ex-Xinhua Finance Board Members Admit to Tax CrimeTom Schoenberg
Two former board members of Xinhua Finance Ltd. pleaded guilty to a charge of conspiring to obstruct the U.S. Internal Revenue Service as part of a deal with prosecutors to drop insider-trading allegations.
Shelly Singhal, 45, admitted today in federal court in Washington that he conspired to hide about $3.5 million in forgiven debt from the IRS for Dennis Pelino, a fellow board member, and Loretta Fredy Bush, the company’s former chief executive officer.
Pelino, 65, pleaded guilty to the same conspiracy charge on Feb. 15 as Bush did two days earlier. All three face as much as five years in prison when sentenced April 29.
Xinhua Finance, the first Chinese company listed on the Tokyo stock exchange, provides information products focused on Chinese and international financial markets.
The three defendants were indicted on May 10, 2011, for allegedly using various entities to disguise the sale of shares in Shanghai-based Xinhua Finance from the Securities and Exchange Commission and investors, and to engage in insider trading. They were also accused of manipulating the company’s balance sheet to avoid taking so-called impairment charges.
Under the indictment, all three defendants faced four charges of mail fraud, each of which carried a maximum penalty of 20 years in prison. In 2011, the three pleaded not guilty to the charges.
As part of the plea agreements, prosecutors said they’ll drop charges of conspiracy, mail fraud and making false statements.
Bush, 54, co-founded Xinhua Finance with Pelino in 1999. She was the company’s chief executive officer and vice chairman of its board of directors until January 2009, according to the indictment. She lives in San Francisco, prosecutors said.
Pelino, of Miami Beach, Florida, was chairman of the compensation committee and a member of the audit and investment committees, according to the indictment, and Singhal, of Newport Beach, California, was chairman of Xinhua Finance’s audit committee and a member of its compensation and investment committees.
The case is U.S. v. Singhal, 11-cr-00142, U.S. District Court, District of Columbia (Washington).