Tuesday, October 9, 2012

Bay Area Solar Firm Settles Fraud Case

A Bay Area solar panel company and its officers have agreed to pay $200,000 to settle a complaint that they defrauded investors by concealing the transfer of nearly half the company's assets to managers in China, the Securities and Exchange Commission said Thursday.
People run as rocks fall near their vehicles after the area was hit by
an earthquake in Zhaotong town, Yiliang County, southwest China's
Yunnan Province, Friday, Sept. 7, 2012. A series of earthquakes collapsed
houses and triggered landslides Friday in a remote mountainous part
of southwestern China where damage was preventing rescues and
 communications were disrupted. Dozens of deaths have been reported.

The company, Worldwide Energy and Manufacturing USA of South San Francisco, raised $8.8 million from U.S. investors in 2010 to expand a subsidiary based in China that generated more than three-quarters of its revenue, the SEC said in a federal court lawsuit. It said the company told investors it fully owned the subsidiary.

In fact, the commission said, the company's chief executive and board chairman, Jimmy Wang, had agreed a year earlier to transfer 49 percent of the subsidiary to its three Chinese managers in early 2010.

Wang and his wife, Mindy, a co-founder and vice president of the company, signed additional agreements in 2010 to complete the transfer and allow the managers to register their ownership with the Chinese government while concealing the arrangement from the company's auditors and directors, the SEC said.

As a result, the suit said, the company filed false reports to the SEC for most of 2009 and 2010.

"The decreased ownership in the subsidiary would be a key piece of information for anyone investing in a company with significant offshore operations," said Marc Fagel, the SEC's regional director in San Francisco.

The company's current CEO, Gary Koos, hired a year ago after the SEC had begun its investigation, said he was glad to get the case behind him. "It's been a very unfortunate situation for the company and its shareholders," Koos said.

The settlement, which carried no admission of wrongdoing, includes a $100,000 penalty against the company and $50,000 each against Mindy Wang and Jeffrey Watson, the company president, who was also aware of the secret transfer agreements, the SEC said.

No financial penalty was assessed against Jimmy Wang in light of his "substantial assistance in the investigation," the commission said, but he could be fined if he violates the terms of an ongoing cooperation agreement with the government.

The Wangs and Watson also agreed to a permanent ban on serving as officers or directors of a public company. Defense lawyers were not immediately available for comment.

Source: http://www.sfgate.com/business/article/Bay-Area-solar-firm-settles-fraud-case-3848971.php

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