A few years ago, short-sellers began to clamor about rampant alleged fraud among Chinese companies that got themselves listed on U.S. stock exchanges through a backdoor method known as a reverse merger. The claims sparked regulatory scrutiny and a raft of class actions, but this week the U.S. Department of Justice suffered a mistrial in one of its first criminal cases targeting a reverse merger company executive.
A federal jury in Washington, D.C., told a judge Monday that they couldn’t reach a consensus on whether a former executive of China North East Petroleum Holdings, Chao Jiang, misappropriated funds and lied to U.S. regulators. Having already ordered the jurors to keep at it once before during their weeklong deliberations, U.S. District Judge Richard Leon declared a mistrial at the request of Jiang’s lawyers at Gibson, Dunn & Crutcher. Earlier in the trial, Leon acquitted Jiang on two of the four counts of securities fraud that he faced.
