The U.S. Securities and Exchange Commission charged China Sky One Medical and its chief executive with securities fraud and said the company recorded fake sales of a weight loss product. China Sky One inflated revenues in its financial statements by booking $19.8 million in phony export sales, the SEC said.
The company, based in China, said in 2007 securities filings it had entered into a distribution agreement with a Malaysian company that would generate the sales, but never entered into such an agreement, the SEC said on Tuesday.
China Sky One Medical has won the bidding process on 50-year land use rights covering approximately 85,000 m2 of land located in the High-Tech Development Zone of Song Bei District in Harbin, China. The Company acquired the Land Use Rights for total consideration of approximately $7.3 million, which was originally deposited by the Company's wholly owned subsidiary, Harbin Tian Di Ren Medical Science and Technology Company, to Harbin High-Tech Development Zone during the second quarter of 2010. The Company intends to build a research and development center, an injection manufacturing facility, a logistics center and an office building on the Land during the first phase of development, which the Company currently expects to complete in the mid of 2012.