Bank of China Managers Indicted in $485 Million Fraud Case

Strategic Insights -

Two former branch managers of the Bank of China have been indicted in the United States on charges of attempting to defraud the lender of $485 million, according to Assistant U.S. Attorney General Alice Fisher. The indictment alleges a 13-year scheme to launder money stolen from the bank through Hong Kong, Canada, and the United States, with the ultimate goal of emigrating to the United States with false identities. China's banking regulator has strengthened supervision over the industry, with the nation's biggest state-owned lenders working to improve risk-management systems and root out fraud.

Key Takeaways:

  • The indictment charges two former Bank of China branch managers, Xu Chaofan and Xu Guojun, with a 15-count scheme involving racketeering, money laundering, and fraud.
  • The scheme allegedly involved the laundering of $485 million through Hong Kong, Canada, and the United States over a period of 13 years.
  • The indictment claims that the former bank managers created shell corporations in Hong Kong and funneled Bank of China's money into these accounts, as well as into personal bank and investment accounts.
  • The defendants, along with their wives and a relative, are accused of transporting stolen money, creating fake identities, and engaging in passport and visa fraud.
  • China's banking regulator has strengthened supervision over the industry, with the nation's biggest state-owned lenders working to improve risk-management systems and root out fraud.
  • Bank of China has stepped up efforts to combat financial crimes, including thwarting 65 fraud attempts involving $61 million in the first 10 months of last year.
  • The lender has fired 31 branch heads and uncovered the fraud case several years ago.
  • Xu Chaofan's attorney, Mitchell Posin, has stated that his client is not guilty and will fight the charges.

Statistics:

  • The alleged scheme involved $485 million in laundered funds.
  • The indictment charges 15 counts of racketeering, money laundering, and fraud.
  • Bank of China has thwarted 65 fraud attempts involving $61 million in the first 10 months of last year.
  • The lender has fired 31 branch heads.
  • The alleged scheme spanned 13 years, from 1991 to 2004.

Sources:

  • "Two former Bank of China managers indicted in $485M fraud case," Washington Post, 2008.
  • "Bank of China fighters Fortune, U.S. regulators," Financial Times, 2008.
  • Statement by Assistant U.S. Attorney General Alice Fisher, March 2008.