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Justice News

Department of Justice
U.S. Attorney’s Office
Northern District of Ohio

Tuesday, June 21, 2016

Two Chinese nationals charged with defrauding Goodyear out of $1.5 million

Xin Franco Fan, 40, and Rex Xu Yu, 41, two Chinese nationals, were charged via criminal information with conspiracy to commit wire fraud and honest services wire fraud for defrauding Goodyear Tire & Rubber Company out of at least $1.5 million, said Acting U.S. Attorney Carole S. Rendon and Stephen D. Anthony, Special Agent in Charge of the FBI's Cleveland office.

Fan and Yu were employees of Goodyear Orient Company (Private) Limited, or GOCPL, a subsidiary of Goodyear, located in Singapore and with offices in China. GOCPL 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. Fan was Yu’s manager, according to the information.

Fan, Yu and others incorporated or caused to be incorporated overseas shell companies in which they held a financial interest. Fan, Yu and others caused Goodyear to purchase natural rubber from these shell companies. They also required Goodyear suppliers to use loading companies in which they had a financial interest, This took place between 2013 and 2016, according to the information.

“These two defendants stole $1.5 million from Goodyear over several years,” Rendon said. “Goodyear is to be commended for promptly reaching out to law enforcement when they uncovered this scheme. Because of their quick action, these men will pay for their crimes.”

“The FBI is responsible for protecting the public’s interest in American companies by aggressively pursuing and bringing to justice those who unjustly profit from American ingenuity by stealing secrets,” said Stephen D. Anthony, Special Agent in Charge, FBI, Northern District of Ohio.

As a condition of their employment, Fan and Yu 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. With the cooperation of Goodyear executives, an investigation into the matter led to Fan and Yu being arrested earlier this year and criminal charges being filed in federal court.

If convicted, the court will determine the defendants’ sentence after a review of factors unique to this case, including the defendants’ prior criminal record, if any, the defendants’ role in the offense, and the characteristics of the violation.  In all cases, the sentence will not exceed the statutory maximum.  In most cases, it will be less than the maximum.

This case is being prosecuted by Assistant U.S. Attorneys Rebecca Lutzko, Henry F. DeBaggis and James Morford following an investigation by the FBI.

A charge is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

Financial Fraud
Updated June 21, 2016