CIIC was a company incorporated in Nevada and engaged in the construction and operation of a toll road in China. The company and its CEO and corporate secretary filed false reports with the SEC to conceal the fact that the company’s CFO had resigned and that CIIC had no CFO at the time of the filings. As a result, CIIC’s 2011 10-K and 10-K/A and its first quarter 2012 SEC Form 10-Q contained material omissions and misrepresentations, including multiple forged signatures and certifications of CIIC’s former CFO.
CIIC hired Li Lei as CFO on June 27, 2011. On September 21, 2011, less than three month later, Lei resigned effective immediately. Within the week following Lei’s resignation, the company’s corporate secretary, Wang Feng, falsely reported that the Lei had decided to continue as CFO for a transition period. CEO Li Xipeng and Feng knew at the time of Lei’s resignation that NASDAQ had decided to delist CIIC for failure to maintain a minimum share price of at least US$1.00, and CIIC was appealing the delisting decision. Feng believed that public disclosure of the resignation of the CFO could have a negative impact on CIIC’s share price, and thus forged Lei’s signatures on the filings as part of a scheme to create the false impression that CIIC continued to have a CFO. CIIC sent correspondence to NASDAQ and its auditors bearing Lei’s forged signature.
The company reported a substantial loss in FY11 and its auditors questioned its ability to operate as a going concern. Its annual report disclosed provisions against receivables and advances of US$145.9m relating to related parties, Tai Ao and Xingyang.
SEC: Litigation Release, 4 Mar 2015
SEC: Annual Report, 30 Jun 2009