| NEW YORK, April 28
NEW YORK, April 28 A U.S. judge declared a
mistrial on Monday in a case brought by the Justice Department
against a former executive at a Chinese company accused of
misappropriating corporate funds after a reverse merger.
U.S. District Court Judge Richard J. Leon of the District of
Columbia granted the mistrial in the fraud case against Chao
Jiang, former vice president of China North East Petroleum
Holdings, after a jury deadlocked on charges against him,
according to defense counsel and court records.
Jiang was among the first executives at a Chinese reverse
merger company to face criminal charges since a U.S. crackdown
began in 2011 against suspected fraud at Chinese companies that
entered the U.S. capital markets through backdoor mergers with
U.S. shell companies. The U.S. Securities & Exchange Commission
has pursued dozens of civil cases.
Jiang was on trial in Washington over the misuse of $1.2
million from the oil exploration company, formed in 2004 through
a reverse merger with a U.S. shell company.
The company, which was delisted from the New York Stock
Exchange in 2012, told investors it planned to use funds from a
stock offering for general corporate purposes and to repay prior
But, prosecutors said, Jiang and the company's chief
executive wired $1.2 million of the proceeds to family members
who used the money to buy a home, jewelry and a car.
The government also accused Jiang of falsely testifying that
no family members received more than $500 from the company, even
though some $965,000 had been wired to his father.
Michael Li-Ming Wong, who represents Jiang, said he was
gratified his client had not been convicted.
"Any time you're facing the full force of the Justice
Department, the SEC and the U.S. Attorney's office, that is
tough," Wong said.
It is unclear if Jiang will be tried again. A spokesman for
the Justice Department declined comment.
The case is USA v Hongjun et al, U.S. District Court,
District of Columbia, 13-cr-00152.
(Reporting By Karen Freifeld; Editing by Cynthia Osterman)