An Akron-based company was fined $10 million by the U.S. government for its role in an international bribery scandal.
The company, BIT Mining Ltd., started in China and is now based on South Seiberling Street in East Akron, just north of the Akron Fulton Airport. It consented to the $10 million penalty following two investigations, one by the Department of Justice and another by the Securities and Exchange Commission, into a scheme to bribe Japanese officials, a violation of the Foreign Corrupt Practices Act (FCPA).
An SEC filing from the company said BIT Mining would agree to a cease-and-desist order from the SEC related to the company’s potential development of an integrated casino resort project in Japan.
The company, then known as 500.com, agreed to pay nearly $2 million in bribes to Japanese government officials to open the Japanese casino, according to a Nov. 18 press release from the Department of Justice. The SEC investigation showed “illicit payments” of about $2.5 million, its cease-and-desist order said.
One-time CEO Zhengming Pan was indicted this summer in relation to the scandal, according to the Department of Justice. Its press release said Pan was charged with one count of conspiracy to violate the anti-bribery and books and records provisions of the FCPA, one count of violating the anti-bribery provisions of the FCPA and two counts of violating the books and records provisions of the FCPA after he paid about $1.9 million in bribes in the form of cash, travel, entertainment and gifts.
If company pays $10 million, DOJ will not continue prosecution
Pan and others entered into sham contracts with consultants and falsely recorded the payments as legitimate expenses, including as management advisory fees, the DOJ said. The company still did not win the Japanese contract.
The appropriate criminal penalty for the company is $54 million, the DOJ said, but BIT Mining is unable to pay that amount. The company said in its SEC filing that it would pay $6 million within 30 days of the Nov. 18 criminal information being filed in U.S. District Court in New Jersey. It would also pay $4 million within 14 days of the SEC’s order being entered, also on Nov. 18.
The company had $10 million for the expected penalty at the end of last year, its filing said. If the penalties are paid, the DOJ will not continue the criminal prosecution of the company, according to the SEC filing.
Additionally, the company must maintain an effective system of internal accounting controls and an anti-corruption compliance program. It must also report to the DOJ annually for three years regarding its compliance measures.
Then, within six months after that three-year term expires, the DOJ will seek to dismiss the criminal information against the company with prejudice, meaning it cannot be charged again for the same violations. If BIT Mining breaches the terms, BIT Mining will be subject to prosecution.
No one from BIT Mining responded to phone calls and emails seeking comment about the settlement. The SEC and DOJ also did not respond to requests for comment.
BIT Mining transitioned its business model to an industry that presents a lower corruption risk, the DOJ said, and no longer operates the gaming portion of its business. Now, it is a cryptocurrency mining company that also operates data centers and manufactures mining machinery, according to its website.
