BVI Shell Company Fails To Hide Ill-Gotten Money From Federal Authorities
Gary Yin of Merrill Lynch
SAN DIEGO — For Gary Yin, a senior vice president at Merrill Lynch and a San Diego Symphony board member, it was fear of losing his job and status in the community, and his loyalty to a fellow Chinese expatriate, that led him to this point.
In a San Diego federal courtroom, a judge considered the appropriate sentence Yin deserved for his part in laundering the profits of insider trading and attempting to cover up the illegal trades made by his client, a senior Qualcomm executive.
U.S. District Judge William Hayes ultimately decided against sending Yin to prison, citing his cooperation with the government in the investigation and the secondary role he played in the scheme.
Yin, now unemployed after his 2013 arrest, will still have to pay: $1.2 million in joint restitution with his client, $228,000 in individual restitution and a $5,000 fine. He’s already forfeited $27,000 from profits from the insider trades and another $71,000 in back taxes.
The sentence was notably less than the one handed down to Jing Wang, the Qualcomm executive who concocted the scheme. The judge said the difference between the two defendants was an important distinction.
“The criminal conduct engaged in is the result of his association with Mr. Wang,” Hayes concluded.
Both Yin and Wang had a common bond.
Yin’s musical talents helped him escape communist China and get him a scholarship at the University of Miami. He got a master’s degree in arts at the University of California San Diego.
Yin started at Merrill Lynch in 1994 and rose to become one of the firm’s senior vice presidents and an international wealth management adviser, handling some $200 million to $300 million in assets. He was a respected and active member of San Diego’s Chinese community by the time he met Wang, one of the community’s most successful members, through church.
Wang, who also grew up in China, was the president of global business operations and an executive vice president at Qualcomm.
The shared bond led to the two men doing business together at Merrill Lynch in 2005.
“To him, it was an honor to have this account,” Yin’s lawyer, Frank Vecchione, said during the sentencing hearing, which concluded this summer.
Wang wasn’t an active trader for the most part, but requested Yin’s help opening a shell company in the British Virgin Islands to disguise his ownership and hide funds.
Yin also went ahead and created his own company there, Pacific Rim Investment Services Ltd., putting it under the name of his mother-in-law to avoid capital gains taxes, court documents say.
In 2010, Wang became privy to information that Qualcomm would be acquiring Atheros Communications and directed Yin to buy Atheros stock using the offshore account. Yin did so, not knowing the trades were being made on insider information, authorities said.
Yin even traded some of his own money, earning a $27,000 profit — less than Wang’s $168,000 or more in profits. Such “piggybacking” on a client’s trade isn’t necessarily illegal, but against company policy and typically frowned upon.
When news of the Atheros acquisition went public, Yin confronted Wang about the trades they’d made. Wang begged Yin to help him keep the trades secret, according to plea documents.
Yin agreed to help, to protect his own job and Wang’s, Yin’s lawyer said.
The cover-up was extensive, including removing damning documents to China, erasing Merrill Lynch records, moving around the insider trading proceeds and fabricating and sticking to a story that blamed Wang’s brother, Bing, in China, said Assistant U.S. Attorney Eric Beste.
Yin traveled twice to China at Wang’s direction to go over the cover story with the brother.
Yin repeated the cover story himself to FBI agents in February 2013. He decided to cooperate two months later and offered investigators help in the case and to testify against Wang if needed.
Both Yin and Wang ultimately pleaded guilty. Wang was sentenced to 18 months in prison for his role, as well as a $500,000 fine on top of the $500,000 he’d already forfeited.
That’s in addition to the $1.2 million joint restitution they have to pay to Merrill Lynch. Yin is also close to settling with the U.S. Securities and Exchange Commission in connection with the case.
Yin apologized to the judge last week. “I take full responsibility for what I did,” he said tearfully, his wife and son sitting in the front row. “I learned this lesson the hard way… The law is above all.”