Singularity Future Technology subpoenaed amid charges that ex-CEO is 'fugitive' from Chinese

Federal authorities have subpoenaed a publicly traded Long Island company in the wake of a short-seller's report that said its former chief executive is a "fugitive" from Chinese authorities, according to a government filing.

Great Neck-based Singularity Future Technology Ltd. last month  said it is complying with subpoenas from the Department of Justice and the Securities and Exchange Commission and is conducting an internal investigation into allegations raised by short-seller Hindenburg Research, which characterized the company's cryptocurrency mining operations as a scam.

The Hindenburg report, issued in May, said that the former CEO, Yang "Leo" Jie, "is a fugitive on the run from Chinese authorities" in connection with charges he ran an investment Ponzi scheme.

A spokesperson for Singularity Future Technology did not respond to questions concerning Jie, his successor and plans for the company's operations. A spokesperson for the SEC said the agency "does not comment on the existence or nonexistence of a possible investigation." The Justice Department did not respond to a request for comment.

In a Ponzi scheme, new investors provide money that allows the scam's operators to pay off earlier investors. If the flow of money from new investors slows, however, the scheme collapses. 

Short-sellers like Hindenburg operate by "shorting" stocks — borrowing shares and selling them on the open market, planning to buy them back later for less money —   so they profit when the share price falls.  Hindenburg's name is a nod to "avoidable," "man-made" disasters such as the spectacular fire that consumed the German airship Hindenburg in 1937 and killed 36 people. 

In 2020, shares of Nikola Corp. tumbled and its CEO resigned following publication of another Hindenburg report that charged the electric truck maker misled investors. Short-sellers typically research securities they suspect are over-valued and then — by circulating research reports, SEC filings and other means — try to bend investor perception toward their negative view. Those campaigns, sometimes justified and sometimes not, have made short-sellers controversial on Wall Street.

In January, two months after Jie became CEO, the company said it was changing its name from Sino-Global Shipping America Ltd. to Singularity Future Technology and expanding beyond its core shipping and logistics business into the sale of special computers used to mine cryptocurrency.

"We see little evidence that Singularity’s 'proprietary' crypto mining rigs ever existed in the first place," the Hindenburg report said. "We think Singularity is an extremely obvious total scam, with little to no actual business operations."

In April 2021, the 21-year-old company said it was going to roll out a non-fungible tokens exchange "for collectors, artists, musicians and investors." Non-fungible tokens, or NFTs, are digital identifiers often used to verify art works and other collectibles.

At that time, the company's then-CEO, Lei Cao, said the NFT opportunity "can best be described as a frenzy," but in January 2022, the company said no NFT business had been launched.

Singularity ranked as Long Island's 43rd largest public company in 2021, based on the annual revenue of about $40 million that it reported to the SEC.

In August, Jie resigned from the company following his suspension by the board of directors. Tuo Pan, Singularity's chief financial officer, was terminated "for cause" the same month, according to a government filing. That filing said the company would halt her compensation at the end of August, but it could be resumed if she were to cooperate with the company's investigation.

With compensation of $845,454, Pan ranked as the ninth highest paid woman executive employed by a Long Island public company in 2021.

The Hindenburg report references a Chinese newscast in which police say that about 20,000 investors in Jie's former company, China-based Tianhe Lianmeng, were bilked out of at least 300 million yuan (about $42 million). 

Efforts to contact Jie were unsuccessful.

Shares of Singularity Future Technology peaked at almost $20 in April, but have been trading under $1 in recent days.

By Ken Schachter

kenneth.schachter@newsday.comkschach

Ken Schachter covers corporate news, including technology and aerospace, and other business topics for Newsday. He has also worked at The Miami Herald and The Jerusalem Post.