Department of Justice Announces FCPA Charges Against Two Individuals for Corruption of Marshall Islands Officials | The Volkov Legal Group

The Department of Justice announced the indictment in New York of Cary Yan, a Chinese entrepreneur, and Gina Zhou, his assistant, on FCPA and money laundering charges related to a scheme to secure control of a an atoll belonging to the Republic of the Marshall Islands (RMI). Yan and Zhou paid bribes to elected RMI officials in exchange for the adoption of specific legislation. Yan and Zhou have been extradited from Thailand and are due to appear in US District Court this week.

Between 2016 and 2020, Yan and Zhou engaged in a bribery scheme designed to corrupt the RMI legislative process. Yan and Zhou were president and assistant of an American non-governmental organization based in New York.

The RMI is located in the central Pacific Ocean and consists of 29 distinct atolls or island chains. Since 1979, the RMI has been an independent nation governed primarily by a legislative branch. The lower house of the RMI legislative body is democratically elected, can legislate and elects the president of the RMI. The president can be replaced by a vote of no confidence.

Yan and Zhou have paid tens of thousands of dollars in bribes to elected officials of the Marshall Islands government, including members of the legislature, in return for supporting legislation to create a semi- self-governing Marshall Islands called the Rongelap Atoll Special Administrative Region (RASAR) which allegedly benefits the business interests of the defendants and their associates.

Yan and Zhou represented themselves as part of the New York NGO. Yan planned to use RASAR to attract investors and businesses he would operate through the US-based NGO.

Initially, Yan and Zhou paid for government officials from RMI to come and go to New York to hold meetings on the RASAR proposal. Yan and Zhou set up a company with an RMI official to participate in the RASAR area once approved.

Subsequently, Yan and Zhou organized a conference on the project in Hong Kong with representatives of the RMI government. The original head of RMI and two other people eligible to vote on the legislation attended the conference. Yan and Zhou paid all of the government officials’ travel, accommodation, and entertainment expenses.

The RASAR legislation was introduced in the Legislative Assembly by one of the government officials who attended the conference.

Yan’s bribery scheme involved several Marshall Islands government officials. A bribe was rejected by a Marshall Islands government official. But other government officials have accepted cash payments and favorable “loans” to support and/or sponsor RASAR legislation.

One of the corrupt lawmakers who had taken bribes was at the center of a political row with a former president of the Marshall Islands who opposed the RASAR legislation. This official has publicly pledged revenge against the President, Hilda Cathy Heine, who opposed the legislation. The political controversy surrounding the RASAR proposal was significant and inflamed by Yan’s commitment to the proposal and his corrupt efforts to enact the legislation.

Hein left office in 2020 and was replaced by David Kabua, who backed the RASAR proposal. The legislature passed the RASAR resolution in March 2020.