Ex-Banking Executive Pleads Guilty in Olympus Fraud Case
A former banking executive has admitted to aiding executives of Japanese camera manufacturer Olympus defraud investors by misrepresenting the company’s financial condition.
US prosecutors alleged last December that Chan Ming Fon, a former bank vice president, helped Olympus executives disguise the movement of hundreds of millions of dollars in order to repay an outstanding loan and to present a stronger financial picture of the company.
Chan pleaded guilty to conspiracy to commit wire fraud and agreed to cooperate with the US government’s probe. “I acknowledge that my conduct was wrong,” he told a federal court in Manhattan. He faces up to five years in prison on the charge and bail has been set at US$3m
Prosecutors alleged that Chan, an executive at two different banks (that remain unidentified) from 1995 to 2004, was responsible for servicing accounts maintained by Olympus and its affiliates.
From 2004 to 2010, he is accused of helping Olympus executives disguise the movement of money that was purportedly invested in government bonds and other secure investments. The bonds were allegedly transferred to an Olympus-controlled entity, which liquidated them to repay an undisclosed, outstanding loan. This enabled the company to present a stronger financial picture to its auditors and the public, prosecutors said.
Chan admitted to Federal Bureau of Investigation (FBI) agents, following his arrest in December, that he provided false information about the Olympus bond portfolio and the nature of the investments to the company’s auditor, prosecutors said. He told agents he was paid more than US$10m for his work, prosecutors said.
Last year, Olympus and several of its former executives pleaded guilty to criminal charges in Japan related to a US$1.5bn accounting scandal that dominated Japanese headlines when first disclosed in 2011.