Ex-Bankers Jailed In $482 Million Scam

For more than a decade, the bank managers lived in high style, jetting to Las Vegas and Macau to bet millions at the baccarat tables, staying for free in casino hotels and lavishing gem-studded watches on their wives.

But then accountants for the Bank of China noticed missing funds -- which eventually totaled $482 million -- and the men were soon fleeing across the globe, doctoring immigration papers and entering into phony marriages, prosecutors say.

The former bankers' gamble ended last week, when a federal judge in Nevada sentenced Xu Chaofan to 25 years and Xu Guojun to 22 years on charges of racketeering, money laundering and visa fraud. Their wives, who were charged with passport fraud and with helping their husbands launder money, received eight-year prison terms.

For now, the men will remain in the North Las Vegas detention facility, where they have spent nearly five years since their capture, while their wives face deportation proceedings.

"We will not allow foreign nationals to abuse their countries' financial systems and then sneak into the United States to live richly off their ill-gotten gains," Lanny A. Breuer, chief of the Justice Department's criminal division, said in a statement to The Washington Post.

Federal investigators say the case is a template for the complicated, globe-trotting prosecutions that the Obama administration hopes to mount against organized crime rings, computer hackers and other sophisticated criminals who operate beyond U.S. borders.

But it also revealed many of the obstacles in such cases: The convictions required years of diplomatic effort, exhaustive demands for translators in Mandarin and Cantonese, and unusual levels of cooperation among investigators in Hong Kong, China and the United States, said lawyers involved in the prosecution.

Several of the court-appointed attorneys for the men and their wives did not respond to requests for comment. But in filings before U.S. District Judge Philip M. Pro, they contested the amount of money at issue and described their clients' marriages as legitimate. An attorney for Xu Chaofan, whom the judge called the "architect" of the fraud, said he would appeal.

Prosecutors traced the fraud to 1991, when Xu Chaofan became vice president of a bank branch. Authorities say that after the bank suffered more than $170 million in losses by speculating on foreign currency, he began to siphon corporate assets to mask some of the losses and to enrich himself, according to court filings.

Some of the money went toward gambling trips to Las Vegas, Australia and Macau, where the men traveled on casino executives' planes and, prosecutors say, spent as much as $4,000 on meals in a night.

The men allegedly were able to avoid detection for years because the bank invested branch managers with unusual authority, allowing the men to approve loans and asset transfers with a single signature.

But in 2001 auditors uncovered inconsistencies in the bank's books and traced them to the branch where Xu Chaofan and Xu Guojun worked, according to government court papers.

Years earlier, prosecutors say, the men "took steps to prepare for an inevitable day of discovery," by laying the groundwork for immigration to the United States. The men's wives allegedly obtained phony marriage documents indicating they had married Americans and began naturalization proceedings. The bankers then obtained false identities and in sham ceremonies married naturalized U.S. citizens, according to court filings by federal prosecutors.

In September 2004, Xu Guojun was arrested in Wichita. Two weeks later, Xu Chaofan was taken into custody in Oklahoma City.

A third former bank manager, Yu Zhendong, lived unnoticed for a time in Los Angeles before agreeing to plead guilty and help U.S. investigators unravel the fraud and immigration scheme. He has since returned to China to serve a prison sentence that could run as long as a dozen years, authorities say.

Mitchell Posin, an attorney for Xu Chaofan, said Friday that he was planning to appeal and argue that the bank was complicit in at least some of the losses. Posin raised broader questions about the prosecution's evidence, some of which was furnished by the Chinese government.

"We view all the evidence that came from China as highly suspect," Posin said. "You have to take a really close look at whether any of the numbers are reliable enough for an American court to use to base a sentence on."