A former bank executive was accused of accepting more than $10
million from Olympus Corp. (OCPNY, 7733.TO) to participate in a
scheme to misrepresent the Japanese camera maker's financial
condition, the U.S. Justice Department said.
Chan Ming Fon was arrested in Los Angeles Thursday morning, and
was expected to appear in a federal court in California in the
afternoon. An attorney for Mr. Chan, a Singapore resident and
citizen of Taiwan, couldn't be immediately located for comment.
As an executive for two unnamed banks from 1995 through 2004,
Mr. Chan was responsible for servicing accounts maintained by
Olympus and its affiliates, the Justice Department said.
From 2004 to 2010, Mr. Chan was involved in a scheme to disguise
hundreds of millions of dollars, transferring bond investments to
an Olympus-controlled entity that liquidated the bonds to pay an
undisclosed, outstanding loan, prosecutors said. The transfers and
loan repayment allowed Olympus to present a stronger financial
condition to an auditor and investors, the Justice Department
said.
Mr. Chan admitted to FBI agents that he provided false
information to Olympus's auditor about the company's investments,
officials said, and said he had received $10 million in
compensation.
"As alleged, Chan Ming Fon was handsomely paid to play an
international shell game with hundreds of millions of dollars of
assets in order to allow Olympus to keep a massive accounting fraud
going for years, duping its auditors and its shareholders," said
U.S. prosecutor Preet Bharara. "By allegedly deceiving Olympus"
auditors over and over again, the defendant undermined the system
of auditor oversight that exists to detect exactly this kind of
fraud, a fraud that victimizes investors and undermines confidence
in the markets."
Mr. Chan is charged with conspiracy to commit wire fraud, which
carries a maximum potential penalty of 20 years in prison.
In September, Olympus and former executives pleaded guilty to
criminal charges related to a $1.5 billion accounting scandal that
dominated headlines in Japan when it was first disclosed last
year.
Write to Kristin Jones at kristin.jones@dowjones.com
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