Chinese Case Kicked Back to China

     SAN FRANCISCO (CN) – Whether falsifying invoices is standard practice in China or not, two former tech workers will have to defend themselves from fraud charges in China, not California, a federal judge ruled.
     NibiruTech, which makes games for iOS and Android mobile devices, sued Andrew and Maggie Jang in July 2014, claiming Andrew Jang stole money from the company while he worked in China as NibiruTech’s marketing director, from November 2011 to October 2013. Jang was also getting his MBA at the University of Electronic Science and Technology of China at the time.
     NibiruTech says Jang was trusted to hire third-party vendors on behalf of the company, and used fake invoices from HJClan Inc., a company owned by his mother Maggie Jang, to embezzle money.
     In a motion to dismiss for improper forum, the Jangs claimed that NibiruTech was in on the fraud, that NibiruTech’s CEO Xiangji Kevin Yang scrutinized the invoices before approving them and that falsifying invoices and emails are standard business practice to skirt government regulations in China.
     “Defendants’ position is that the fictitious invoices and supporting e-mails were openly created at NibiruTech, with full knowledge and approval of NibiruTech’s top management,” U.S. District Judge Phyllis Hamilton wrote in her Feb. 23 ruling.
     While Hamilton did not comment on the merits of Jang’s defense, she said: “The Chinese courts would have a significantly greater interest in resolving such a
     dispute, as well as examining the issue of the parties’ admitted creation of fictitious
     business documents to evade Chinese currency restrictions.”
     Hamilton agreed with Jang that the case’s connection to California is tenuous.
     With regard to public-interest factors, there is only a slight connection between
     the parties’ dispute and California, as Andrew Jang was employed in China by a Chinese company at the time of the events that gave rise to the lawsuit, Hamilton found.
     HJClan, the entity to whom NibiruTech claims the funds were diverted, is a California corporation, and its president, Maggie Jhang, is a California resident. But NibiruTech said the alleged fraud was masterminded by Andrew Jang while he was employed in China. Thus, there is “minimal, if any, local [California] interest in this case,” Hamilton.
     Hamilton granted the motion to dismiss for forum non conveniens, on the condition that an action is filed in China within six months.
     “It is possible, as alleged by defendants, that NibiruTech created fictitious invoices to avoid Chinese governmental regulations or restrictions on transfer of funds, in which case NibiruTech might not be eager to file another action in China,” she wrote. “Alternatively, it may be true, as NibiruTech claims, that the Jangs have embezzled funds from NibiruTech, and are thus unlikely to actually appear to defend against any civil action brought against them in China (or against any criminal action for that matter). If defendants do fail to appear in the Chinese action (notwithstanding having agreed to do so), that would establish the lack of an available alternative forum, and the court would permit NibiruTech to refile the case here.”
     Attorneys for both sides did not respond to a request for comment.

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