CLEVELAND (June 23, 2016) — Two former employees of Goodyear in Singapore have been charged with conspiracy to commit wire fraud and honest services wire fraud in a scheme to allegedly bilk the tire maker out of at least $1.5 million.
The U.S. District Attorney for the Northern District of Ohio filed suit against Xin Franco Fan, 40, and Rex Xu Yu, 41, in the Northern District of Ohio court June 21.
Messrs. Fan and Yu were originally arrested Feb. 19 while attending meetings at Goodyear's headquarters in Akron. They were arraigned Feb. 25 in Youngstown, Ohio, federal district court, then each released on $50,000 bond with special terms attached. Both men filed unopposed motions with the court March 29, asking it to remove the home detention and location monitoring requirements of their bonds.
“The only ‘new' news is that the Department of Justice (DOJ) brought formal charges against the defendants,” a Goodyear spokesman told Tire Business about the June 21 indictment. He declined further comment because Goodyear does not comment on active litigation.
Messrs. Fan and Yu were employees of Goodyear Orient Co. (Private) Ltd. (GOCPL), a Goodyear subsidiary based in Singapore with offices in China. Mr. Fan was Mr. Yu's manager, according to the indictment.
GOCPL manages all of Goodyear's natural rubber purchasing, delivery, financing and quality certifications, according to the DOJ.
The government's case against Messrs. Fan and Yu is contained in a Feb. 19 affidavit filed with the court by FBI Special Agent David L. O'Connor.
Under Mr. Fan's direction, Goodyear spent about $838 million in 2015 acquiring natural rubber, Mr. O'Connor stated.
Between 2013 and 2016, Messrs. Fan and Yu allegedly received kickbacks for natural rubber purchased from Toprubber Pte. Ltd., a company run by former GOCPL employee Lim Chin Ming, according to Mr. O'Connor's affidavit.
Goodyear received an anonymous tip in the summer of 2015, Mr. O'Connor said, that Messrs. Fan and Yu were receiving kickbacks.
He said he believed the evidence showed that Toprubber — with Mr. Fan's knowledge and involvement — bought rubber from one of Goodyear's biggest suppliers, GMG Investment (S) Pte. Ltd., increased the price, and then resold the rubber to GOCPL.
“I further believe that the evidence shows that Fan, through material false statements and omissions, is either getting a kickback payment from Toprubber in connection with these sales, or otherwise profiting directly from them as an owner,” Mr. O'Connor said.
Goodyear executives cooperated with the DOJ and the FBI in the investigation that led to Messers. Fan's and Yu's February 2016 arrest, according to a DOJ press release.
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