On November 19, 2024, the United States Department of Justice publicly released the indictment against Pan Zhengming, the former CEO of 500.com (now BIT Mining Ltd.), a Chinese citizen, accusing him of violating the Foreign Corrupt Practices Act (FCPA). At the same time, BIT Mining has reached a settlement with the Department of Justice and the Securities and Exchange Commission (SEC) regarding allegations of bribery to Japanese government officials.
500.com, founded in 2001, is China’s first company to provide online lottery agent sales services. Pan Zhengming served as the company’s CFO in 2011 and became the CEO in 2015, also a member of the board’s strategic committee.
A federal grand jury in New Jersey had already indicted Pan Zhengming on June 18 this year, charging him with conspiracy to violate the FCPA and multiple counts of violating anti-bribery and accounting recordkeeping provisions of the Act. According to the charges, Pan instructed the company to pay approximately $1.9 million in bribes to Japanese officials to secure a contract for a large integrated resort and casino project in Japan.
The Department of Justice stated that Pan Zhengming concealed the illegal payments through fake consulting contracts and directed the company to disguise these bribes as legitimate expenses in falsified records.
BIT Mining signed a three-year Deferred Prosecution Agreement (DPA) with the New Jersey prosecutor, admitting to conspiring to bribe and violating accounting recordkeeping regulations, agreeing to pay a $10 million criminal fine, and continuing to cooperate with the Department of Justice’s investigation. Additionally, some of the fine will be offset against civil penalties imposed by the SEC.
Under the agreement, BIT Mining is required to enhance its compliance program and regularly report progress to the Department of Justice.
BIT Mining admitted that between 2017 and 2019, Pan Zhengming and his agents bribed Japanese officials in an attempt to help the company win bids for integrated resort projects including hotels, casinos, and other facilities. However, despite the substantial bribes paid, the company ultimately failed to secure the contracts.
During the investigation, BIT Mining implemented various remedial measures, including strengthening board oversight, promoting a culture of compliance, implementing anti-corruption policies, and transitioning its business to low-risk sectors.
The Department of Justice acknowledged BIT Mining’s proactive remedial efforts and cooperation in the investigation to a certain extent, but noted that the cooperation was passive and had limited impact.
Prosecutor Philip R. Sellinger of New Jersey stated, “This illicit scheme started at the top, with the company’s CEO allegedly fully involved in directing the illicit payments and subsequent concealment actions. The company has admitted to its crimes and agreed to pay a $10 million fine, while the former CEO is also facing charges for his involvement in the scheme.”
The FBI’s Criminal Investigation Division reiterated its determination to investigate illegal activities involving corporations and individuals.