NEW YORK – A former bank vice president has been charged with helping Olympus Corp. engage in what U.S. prosecutors called “massive” accounting fraud.
Chan Ming Fon was arrested Thursday in Los Angeles and faces federal fraud charges in New York, according to a statement released by Preet Bharara, U.S. attorney in New York City. Fon was scheduled to appear in federal court in Los Angeles later the same day.
Camera and endoscope maker Olympus restated five years of earnings last December and took a $1.3 billion (¥109.2 billion) cut in its net assets after it admitted paying inflated fees on takeovers and overpaying for three Japanese companies to conceal past investment losses.
From 2004 to 2010, Chan joined in a scheme to disguise hundreds of millions of dollars that Olympus purportedly invested in government bonds and other investments, prosecutors said. Fon was paid more than $10 million (¥840 million) for his role, prosecutors said.
At the direction of Olympus executives, Chan, who managed a fund holding the investments, transferred the portfolio to an Olympus-controlled entity called Easterside Investments Ltd, prosecutors said. Easterside then liquidated the bonds and used the money to repay concealed loans, they said.
“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 shareholders,” Bharara said in the statement.