China Medical Technologies was a Cayman Islands corporation that claimed to develop advanced medical diagnostic and therapeutic devices. It raised $677 million through a 2005 IPO and multiple bond issuances. In reality, the company's technology was based on intellectual property that was over two decades old, off-patent, and had little value. The company ceased operations in early 2012, leaving $426 million in bond debt unpaid.
The US Department of Justice indicted founder and CEO Xiaodong Wu and CFO Tak Yung Samson Tsang in March 2017, charging them with stealing more than $400 million from investors in a seven-year scheme. Instead of using the funds for business purposes as promised, they diverted money to entities they controlled. Wu's wife allegedly gambled $62 million in slot machines at the Bellagio casino in Las Vegas between 2008 and 2012.
Investors filed class action lawsuits. The company was delisted from NASDAQ, moved to pink sheets, and eventually deregistered. Liquidators estimated the total missing cash could be as high as $670 million. The case became one of the most brazen examples of China-based company fraud on US markets, alongside Sino-Forest and Longtop Financial.
The CEO diverted bond proceeds to his own entities, and his wife gambled $62M in Vegas, leaving $426M in unpaid debt.
CEO Xiaodong Wu and CFO Tsang stole over $400M from investors in a seven-year scheme. They diverted bond proceeds to entities they controlled instead of using them for business purposes.
The company's technology was based on outdated, off-patent IP with little value. The entire business was a facade for stealing from investors. Wu's wife gambled $62M in Vegas.
A company that raises hundreds of millions on outdated patents and no real revenue is not a business — it is a withdrawal vehicle. China Medical's $677M was gone before anyone checked the lab.
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