The founder of coal company L&L Energy Inc was sentenced to five years in prison Friday for lying to U.S. regulators about who was operating the company and issuing shares to Chinese investors without disclosing the existence of a regulatory probe.
Dickson Lee, 66, pleaded guilty to two counts of securities fraud in September and was sentenced in federal court in Seattle, Washington.
L&L Energy, which had all of its operations in China and Taiwan, also pleaded guilty in January.
Prosecutors said Lee falsely reported in U.S. Securities and Exchange Commission filings that he had a chief financial officer in place, as well as adequate internal controls, in an effort to get the company listed on a national stock exchange.
In addition, Lee issued 730,000 shares of stock to third-party investors whom Lee then instructed to sell the stock in order to generate revenue for the cash-strapped company, authorities said. Lee, however, failed to disclose that the SEC had already opened an investigation into the company, according to prosecutors.
Lee's lawyer, Russ Aoki, said in an email that Lee had tried his best to make L&L successful and accepted his sentence with "his head up."
"It was his creation, his job, and most of all his passion," Aoki said. "But Mr. Lee recognizes now that he did not have the experience to run a rapidly growing publicly traded company."
Lee is facing a parallel civil case by the SEC.
An investor class action filed against the company for false filings and other misconduct in New York federal court recently settled for $3.5 million and is awaiting final approval from a U.S. judge.
The case is U.S. vs. Lee et al., U.S. District Court for the Western District of Washington, No. 14-24.
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