Chinese company investigated for possible money laundering

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Posted: Mar 22, 2013 at 5:47 am

Last updated: March 21, 2013, 4:49 am.


Think you have a gambling problem? How about $ 116,000 a month on a slot habit? Bi Xiaodong, wife of the CEO of China Medical Technologies (CMT), Wu Xiaodong, is said to have pumped that much into the high-roller slot machines of the upscale Wynn and Bellagio casinos in Las Vegas between 2005 and 2010, and with a whopping allowance of the man from whom she was then separated.

Washed out

Believe it or not, there are people tossing around money at this insane level in Vegas, so wagering $ 5,000 a hand on slots probably wouldn’t have raised too many eyebrows. What caught investigators’ attention, however, was how Ms. Xiaodong received the enormous sums of money to be able to afford to gamble at this level, with one source suggesting that she may be up to $ 62 million stuck through the Bellagio slots between 2008 and 2012 alone.

The Missus claims she received her play money bonus from childcare and livelihood (which raised the question of whether her children had shoes or milk to drink); and claims it broke up with Wu in 2001 and has had nothing to do with its CMT business since it went public on the New York Stock Exchange in 2005.

Money worries

It was last summer when CMT had to close after creditors moved in to collect missing interest payments from the company and force them into liquidation. Those bondholders included GLG Partners, a London company with $ 26.4 billion in assets; GLG is now suing Wu Xiaodong in a civil lawsuit in California, claiming Xiaodong stole assets from CMT and then secretly fed them to his wife, who in turn let them run through the fancy strip slot machines.

How it works

Here’s the shell game: The casino withdraws players from long slot machine play times with a credit for the remainder of the deposited money. The player can then take this note to a casino cashier, receive a check for the balance, deposit that check into their own bank account and declare it as a “gambling winnings” on their tax return (which will then be canceled by them). Amount in “gambling losses” of course.)

Bi Xiaodong reportedly put nearly $ 17 million in profits between 2009 and 2011, with the additional loss to offset the profits. But the question of where the money came from prompted investigators to investigate the possibility of CMT cash flow and the possibility of money laundering from CMT’s massive IPO funds.

Money talks

Now, CMT’s liquidators are trying to track down about $ 670 million in missing cash raised during the company’s 2005 IPO. The company’s former finance director, Takyung Tsang, and his wife are also under investigation.

Could be a case of dirty laundry.