SEC Charges China-based Yuhe International, Inc. and its CEO Gao Zhentao with Fraud

SEC v. Yuhe International, Inc., and Gao Zhentao, Case No. 1:13-cv-01598-RCL (D.D.C.). On October 18, 2013, the SEC announced fraud charges against Yuhe International, Inc.(“Yuhe”), a China-based provider of broiler chickens, and its Chief Executive Officer, Gao Zhentao (“Gao”).  According to the SEC, Yuhe, under Gao’s direction and control, made false public statements about the acquisition of chicken farms for more than $15 million.  The company provided updates about the farms’ contribution to the company’s revenue.  In October 2010, Yuhe completed a public offering in the United States, selling more than four million shares of its common stock and generating net proceeds in excess of $27 million.  The SEC alleges that, in truth, the acquisition never occurred, which Yuhe admitted during an investor conference call and in a subsequent filing on Form 8-K.  The SEC charged Yuhe with violations of Section 17(a) of the Securities Act, Sections 10(b),     13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act, and Rules 10b-5, 12b-20, 13a-1, 13a-11, 13a-13, 14a-3, and 14a-9, thereunder.  The SEC charged Gao with violating Section 17(a) of the Securities Act, Sections 10(b), 13(b)(5), and 14(a) of the Exchange Act,
and Rules 10b-5, 13a-14, 13b2-1, 14a-3, and 14a-9, thereunder, and with aiding and
abetting Yuhe’s violations of the law.  The SEC seeks injunctive relief, civil monetary penalties, disgorgement plus prejudgment interest, and an officer and director bar against Gao.

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