On November 14, 2019, Yanliang “Jerry” Li and Hongwei “Mary” Yang, both Chinese citizens, were charged with conspiracy to violate the Foreign Corrupt Practices Act. Li was also charged with perjury and destruction of records in a federal investigation. According to the indictment, Li and Yang served as the managing director and head of external affairs, respectively, of a Chinese subsidiary of a company headquartered in Los Angeles that sold personal and health care items. Li and Yang are alleged to have approved bribe payments to Chinese government officials in order to obtain licenses for making direct sales in various provinces in China, influence Chinese government investigations into the company’s compliance with laws on direct selling, and remove negative stories from news reports issued by state-owned media companies. The alleged scheme lasted about ten years, according to the indictment. According to the DOJ, Li and Yang obtained reimbursement for the bribes paid to Chinese officials by submitting false expense reports. The indictment alleges that Li also furthered the scheme by signing false certifications in connection with the company’s quarterly and annual US Securities and Exchange Commission filings, and by providing false testimony to the SEC. After receiving document preservation notices from the company, Li also allegedly installed special software on his laptop designed to permanently erase files, and deleted about 200 files using the software.
In a parallel action, the SEC charged Li with violating the FCPA’s anti-bribery and books and records provisions, as well as aiding and abetting the company’s violations of the books and records and internal controls provisions of the FCPA. Although neither the indictment nor the SEC complaint identify Li and Yang’s employer, public sources and media reports state that they were employed by the Chinese subsidiary of Herbalife Nutrition Ltd. In SEC filings, Herbalife has disclosed an ongoing bribery investigation by the SEC and DOJ.