Benjamin Wey, a well-known Wall Street financier who assisted many Chinese companies in accessing U.S. markets through reverse mergers, was arrested this week and charged with altering the companies’ shares to allegedly earn himself tens of millions of dollars in illicit gains. Wey, the CEO of New York Global Group, now has criminal and civil cases against him. They represent the highest profile cases yet as the government tries to put its foot down during a mass of alleged accounting fraud and other illegalities by small Chinese companies that have gone public in the United States.

Allegedly, Wey covertly controlled large portions of the shares of the companies for which he orchestrated reverse mergers and inflated the companies’ stock prices while selling the shares he controlled at artificially high levels, according to the Manhattan federal court indictment. The SEC has also brought a civil action against him.

According to Manhattan U.S. Attorney Preet Bharara, “Ben Wey fashioned himself a master of industry, but as alleged, he was merely a master of manipulation.”

Wey was arrested in his Manhattan home Thursday and is being charged with fraud and conspiracy, among other charges. He was released on a $10 million bond.

Wey played a prominent role in the reverse-merger boom that brought numerous Chinese companies to the United States over ten years ago. However, the Chinese reverse mergers began to go awry in 2011 when over 170 U.S.-traded Chinese companies, both reverse-merger firms and those that went public via IPOs, received questions or criticism about their accounting and disclosure practices. As a result, the companies’ stocks plummeted, and American investors lost billions.

The government’s indictment includes eight counts and accuses Wey of managing massive amounts of shares of shell companies, through kin and employees. The companies then went through reverse mergers with three Chinese companies, and as a result Wey controlled a large amount of the NASDAQ traded companies that ensued.

Wey failed to disclose to the government his interest in the companies as required, and he dispersed shares around to friends, employees and business associates to meet NASDAQ requirements that companies have a minimum number of shareholders.

According to the indictment, Wey then manipulated the companies’ stock prices in a number of ways. For example, he had two brokers solicit customers to purchase the companies’ shares while also discouraging clients from selling them.

Wey and his wife allegedly used the profits to buy an apartment at the Ritz-Carlton Hotel in New York, among other things.

These accusations come on the heels of June jury verdict that ordered Wey to pay $18 million to a former employee who alleged Wey of coercing her into sex and later firing her. Wey denied the claims.

If you or someone you know has lost money as a result of an investment or Ponzi scheme, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies or complete the contact form.