July 7, 2015 / 9:47 PM / 4 years ago

Ex-Commerzbank executive gets time served for Olympus fraud role

NEW YORK (Reuters) - A former Commerzbank AG executive avoided further prison time on Tuesday after cooperating in an investigation of the bank’s role in an accounting fraud at Japan’s Olympus Corp.

Chan Ming Fon, 52, was sentenced by U.S. District Judge Laura Taylor Swain in Manhattan to time served after cooperating in a probe of Commerzbank that resulted in part of its $1.45 billion settlement with U.S. authorities in March.

Swain cited the “substantial assistance” Chan provided authorities following his 2013 guilty plea to engaging in a wire fraud conspiracy. Chan, who spent nine months in jail after his arrest in 2012, was also ordered to forfeit $13 million.

“I am deeply sorry and regret what I have done,” he said in court.

Chan, a resident of Singapore and Taiwan, was the sole individual criminally prosecuted in the United States for his role in what became one of the biggest corporate scandals in Japan’s history.

In 2011, Olympus admitted to having concealed investment losses dating to the 1990s in a $1.7 billion accounting scandal, and using a series of overpriced acquisitions, some of which it quickly wrote down, to cover up losses.

In 2013, a Japanese court ordered Olympus to pay 700 million yen ($7 million) for falsifying financial reports, while three former executives, including former Chairman Tsuyoshi Kikukawa, received suspended sentences following their convictions.

Prosecutors said that Chan, while working from 1995 to 2004 first as an executive at Commerzbank and later at Societe Generale, helped carry out a set of off-balance sheet transactions engineered by Olympus insiders.

From 2005 to 2010, Chan, then managing his own fund, helped secretly liquidate hundreds of millions of dollars of Olympus investments and falsely certified to auditors that the investments still existed, prosecutors said.

As part of his cooperation deal, prosecutors said Chan provided information about the roles of Commerzbank and Societe Generale.

Prosecutors said his information led directly to Commerzbank agreeing to pay $300 million to victims of the fraud for not complying with U.S. laws that require detecting and reporting suspicious transactions.

That sum was part of a larger, $1.45 billion settlement with U.S. authorities that also resolved an investigation of the bank’s dealings with Iran and other sanctioned countries.

Societe Generale was never charged. A spokesman did not respond to a request for comment.

The case is U.S. v. Fon, U.S. District Court, Southern District of New York, No. 13-cr-00052.

Reporting by Nate Raymond in New York; Editing by Leslie Adler

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