A filing made today, Monday, in Santa Clara County Superior Court (Case No. 1-08-CV-110304) charges that Simpson, Thacher & Bartlett learned of Jianping “Tony” Qu's alleged attempt to hide $40 million of PrediWave Corporation from the firm's executives and in a bank account in Japan. The problem is Simpson, Thacher & Bartlett did not, for some reason, tell the company's board of directors, and the firm asserts that Simpson, Thacher & Bartlett officers tried to block investigation into Tony Qu's actions.
This is heavy stuff. The press release which posted information on the complaint filing has the following charges:
1) Attorneys for Simpson Thacher became aware by December 1, 2004 that Mr. Qu was directing the sale of tens of millions of dollars of memory chips to PrediWave through a shell corporation whose profits were pocketed by Mr. Qu.
2) Simpson Thacher uncovered evidence showing that delivery records and price quotes from a non-existent Chinese company were falsified, while the memory chips themselves were purchased from a tech firm operating only a few miles from PrediWave’s Fremont headquarters.
3) Mr. Qu was paid a $25 million bonus in January 2005 while Simpson Thacher sat on the evidence it had gathered regarding his activities.
4) Attorneys for Simpson Thacher filed a lawsuit in May 2004 preventing two PrediWave directors from reviewing company documents and conducting an investigation that would reveal Mr. Qu’s misconduct.
5) In 2005, Simpson Thacher chose to hire a private investigations firm, not for the purpose of exposing Mr. Qu’s actions, but to determine the probability of the fraud going public. Simpson Thacher never disclosed the results of that investigation to PrediWave’s board of directors.
6) While serving as PrediWave’s counsel for only little over a year, Simpson Thacher billed over $16 million in legal fees. At the same time, Mr. Qu was receiving approximately $25 million in annual bonuses from a company that had recorded no sales and no profits.
Fremont-based PrediWave lost a $2.8 billion judgement for charges that it defrauded a Chinese company and misappropriated funds in 2006. According to VentureBeat, China's New World TMT invested $700 million in investments and purchases for a one way "Video On-Demand" cable system but the set-top boxes failed to work. VentureBeat reports that Jianping “Tony” Qu took off with $100 million in bonuses, leased 30 cars and purchased a whopping 19 homes.
PrediWave filed for bankruptcy.
This is where the lawsuit against Simpson, Thacher & Bartlett comes into play. PrediWave believes the law firm was instrumental in the cover-up that cost the firm $2.8 billion.
Stay tuned.
