AKRON (Oct. 20, 2016) — Two Chinese nationals were sentenced to 27 months in prison recently for defrauding Goodyear out of $1.5 million, according to a report by the U.S. Department of Justice.
Xin Franco Fan and Rex Xu Yu pleaded guilty earlier this year to conspiracy to commit wire fraud and honest services wire fraud. In addition to their prison sentences, they were ordered to pay $1.5 million in restitution.
The two men were employees of Goodyear Orient Co. Ltd (GOCPL), a subsidiary of Goodyear in Singapore and with offices in China, which manages all of the natural rubber purchasing, delivery, financing and quality certifications for Goodyear's global operations.
Goodyear, through GOCPL, spends approximately $1 billion annually to acquire natural rubber for its operations.
According to the report, the two men caused Goodyear to purchase natural rubber from shell companies in which they had an interest.
Between 2013 and 2016, the pair also required Goodyear suppliers to use loading companies in which they had a financial interest.
Messers Fan and Yu were arrested Feb. 19 while attending meetings at Goodyear headquarters in Akron. They were arraigned Feb. 25 in Youngstown, Ohio, federal district court, and formally charged with conspiracy to commit wire fraud and honest services wire fraud in Cleveland federal district court June 21.
Both men will be deported upon their release.
As a condition of their employment, they were obligated to act in the best interests of Goodyear when purchasing natural rubber.
In 2015, Goodyear received an anonymous tip that Fan and Yu were receiving kickback payments in connection with GOCPL's raw materials purchases.
This story first appeared on the website of European Rubber Journal, a United Kingdom-based sister publication of Tire Business.