Damian Williams, the United States Attorney for the Southern District of New York, Kenneth A. Polite, Jr., Assistant Attorney General for the Criminal Division of the U.S. Department of Justice, and Michael J. Driscoll, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging CARY YAN, a/k/a “Hong Hui Yan,” a/k/a “Chen Hong,” and GINA ZHOU, a/k/a “Chaoting Zhou,” a/k/a “Angel Zhou,” with engaging in a multi-year scheme to bribe government officials in the Republic of the Marshall Islands (the “RMI”) to pass certain legislation that would benefit the business interests of YAN, ZHOU, and their associates. YAN and ZHOU are charged with violations of the Foreign Corrupt Practices Act (“FCPA”), money laundering, and conspiracy to commit both. YAN and ZHOU were arrested in Thailand on November 16, 2020, were extradited from Thailand, and arrived in this District today. YAN and ZHOU are expected to be presented on Tuesday. The case is assigned to District Judge Naomi Reice Buchwald.
U.S. Attorney Damian Williams said: “As alleged, Cary Yan and Gina Zhou’s bribery scheme was designed to influence and manipulate the legislative process of the Republic of the Marshall Islands in order to benefit themselves and their associates financially. Yan and Zhou’s bribes blatantly flouted the sovereignty of the Republic of the Marshall Islands and its legislature, and the dedicated investigative work carried out by this Office and our partners signals that the Southern District of New York will not tolerate those who violate the integrity of democratic processes.”
Assistant Attorney General Kenneth A. Polite, Jr. said: “Yan and Zhou allegedly engaged in a multi-year scheme to bribe elected officials in the Marshall Islands and to corrupt the legislative process. The department is committed to prosecuting individuals who participate in international corruption and undermine the integrity of democratic institutions and the free marketplace.”
FBI Assistant Director Michael J. Driscoll said: “As alleged, the defendants conducted multiple illegal activities to benefit their personal interests at the expense of the people of the Marshall Islands. The FBI, along with our global law enforcement partners, is committed to bringing to justice those who seek to use corruption and fraud as a means of doing business – regardless of where in the world they are located.”
According to the Indictment unsealed today in Manhattan federal court and publicly-available information:[1]
CARY YAN and GINA ZHOU, acting as officers, directors, employees, and agents of a New York City-based non-governmental organization (the “NGO”) and while in New York City and other locations in the territory of the United States, participated in a scheme to offer and pay bribes to government officials in the RMI to pass legislation that would benefit the business interests of YAN, ZHOU, and their associates. From at least in or about 2016 through at least in or about 2019, YAN was and held himself out to be the President and Chairman of the NGO, and ZHOU was and held herself out to be the assistant to the President and Chairman of the NGO.
Beginning at least as early as in or about December 2016, YAN and ZHOU began communicating and meeting with RMI officials in both New York City and the RMI concerning the development of a semi-autonomous region within a part of the RMI known as the Rongelap Atoll. The creation of the proposed semi-autonomous region was intended by YAN, ZHOU, and those associated with them to obtain business by, among other things, allowing the NGO, YAN, and ZHOU to attract investors to participate in economic and social development projects that YAN, ZHOU, and others promised would occur in the semi-autonomous region.
In or about April 2018, YAN and ZHOU caused the NGO to host a conference in Hong Kong that was attended by, among others, RMI officials. The purpose of the conference was to publicly launch an initiative to establish the so-called Rongelap Atoll Special Administrative Region (the “RASAR”), also known as the Rongelap Special Economic Zone or Rongelap Atoll Digital Special Economic Zone, among other names. As proposed by YAN and ZHOU, the RASAR would be created by legislation (the “RASAR Bill”) that, if enacted by the RMI legislature, would significantly change the laws on the Rongelap Atoll to attract foreign businesses and investors, such as by lowering or eliminating taxation and relaxing immigration regulations. YAN planned to use the RASAR to, among other things, attract investors and customers to businesses that he would operate in the RASAR, in whole or in part through the NGO. A number of RMI officials attended the April 2018 conference, including certain members of the RMI legislature with the ability to vote on the RASAR Bill if and when it was introduced. The NGO paid for the travel of those officials to Hong Kong and for their accommodations and entertainment while there.
In or about mid-August 2018, certain RMI legislators officially introduced the RASAR Bill. Starting before that date, and continuing until at least on or about November 1, 2018, YAN and ZHOU offered and provided a series of cash bribes and other incentives to obtain the support of RMI legislators for the RASAR Bill.
On or about November 18, 2019, the RMI held elections for the legislature. As a result of these elections, on or about January 13, 2020, the then-President of the RMI left office. Shortly thereafter, YAN and ZHOU began emailing and meeting with certain RMI officials to continue their plan to create the RASAR. In or about late February 2020, the RMI legislature began considering a resolution that would endorse the concept of the RASAR (the “RASAR Resolution”), a preliminary step that would allow the RMI legislature to enact the more detailed RASAR Bill at a later date.
On or about March 7, 2020, YAN and ZHOU met with a close relative (the “Relative”) of a member of the RMI legislature in the RMI (“Official-3”). During the meeting, YAN and ZHOU gave the Relative $7,000 in cash to pass on to Official-3, specifying that this money would be used to induce and influence other RMI legislators to support the RASAR Resolution. YAN and ZHOU further stated, in sum, that they knew that Official-3 needed more than $7,000 for this purpose and that YAN and ZHOU would soon obtain additional cash for Official-3. YAN and ZHOU also discussed having previously brought larger sums of cash into the RMI through the United States and that they planned to do so again in the future.
On or about March 20, 2020, the RMI legislature passed the RASAR Resolution with the support of legislators to whom ZHOU and YAN had provided bribes and other incentives.
* * *
YAN, 50, and ZHOU, 34, both of whom have traveled on passports issued by the RMI, are charged with conspiring to violate the FCPA, violating the FCPA, conspiring to commit money laundering, and committing money laundering. The maximum penalties for these charges are as follows: five years in prison for conspiring to violate the FCPA; five years in prison for each violation of the FCPA; 20 years in prison for conspiring to commit money laundering; and 20 years in prison for committing money laundering.
The maximum potential sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.
Mr. Williams praised the outstanding work of the FBI. Mr. Williams also thanked the Department of Justice, Criminal Division’s Office of International Affairs for their assistance in the extradition of YAN and ZHOU, as well as the U.S. Embassy in Bangkok, the Royal Thai Police, and the Office of the Attorney General of Thailand.
The case is being prosecuted by the Office’s Public Corruption Unit and the Criminal Division’s Fraud Section. Assistant U.S. Attorneys Hagan Scotten, Lara Pomerantz, and Derek Wikstrom, and Trial Attorney Gerald Moody are in charge of the prosecution.
The charges contained in the Indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty.
[1] As the introductory phrase signifies, the entirety of the Indictment and the descriptions of the Indictment set forth herein constitute only allegations, and every fact described should be treated as an allegation.