Chinese grifters tie up UN, Marshalls in scam

Yan smiles while former UN Secretary-General Ban Ki-moon (center) holds a box of his miracle water as former General Assembly President Sam Kutesa (right) looks on. (Credit: Emails obtained by reporters)

The stakes could scarcely have been higher for Hilda Heine, the former president of the Marshall Islands.

For years, her remote archipelago nation of just 40,000 people was best known to the world — if known at all — for Cold War nuclear testing that left scores of its islands poisoned. Sitting in the center of the Pacific Ocean, the country was a strategic but forgotten U.S. ally.

But the arrival of a couple of mysterious strangers threatened to change all that. With buckets of cash at their disposal, the Chinese pair, Cary Yan and Gina Zhou, had grand plans that could have thrust the Marshall Islands into the growing rivalry between China and the West and perhaps fracture the country itself.

First proposed in 2017, while Heine was still president, Yan and Zhou’s idea raised public controversy. With backing from foreign investors, the couple planned to rehabilitate one irradiated atoll, Rongelap, and turn it into a futuristic “digital special administrative region.” The new city of artificial islands would include an aviation logistics center, wellness resorts, a gaming and entertainment zone, and foreign embassies.

Thanks in part to the liberal payment of bribes, Yan and Zhou had managed to gain the support of some of the Marshall Islands’ most powerful politicians. They then lobbied for a draft bill that would have given the proposed zone, known as the Rongelap Atoll Special Administrative Region (RASAR), its own separate courts and immigration laws.

Heine was opposed. The whole thing reeked of a Chinese effort to gain influence over the strategically located Marshall Islands, she told OCCRP.

The plan was unconstitutional and would have created a virtually “independent country” within the Marshall Islands’ borders, she said. The new Chinese investor-backed zone would also have occupied a geographically sensitive spot just 200 kilometers of open water away from Kwajalein Atoll, where the U.S. Army runs facilities that test intercontinental ballistic missiles and track foreign rocket launches.

But when President Heine argued against the draft law, she became a target herself. In November 2018, pro-RASAR politicians backed by Yan and Zhou pushed a no-confidence motion to remove her from power. She survived by one vote.

Even then, the president said she had no idea who this influential duo really were. Although they seemed to be Chinese, they carried Marshall Islands passports, which  gave them visa free access to the United States. Nobody seemed to know how they had obtained them.

“We looked and looked and we couldn’t find when and how they got [the passports],” Heine said. “We didn’t know what their connections were or if they had any connections with the Chinese government. But of course we were suspicious.”

The plan came to an abrupt end in November 2020, when Yan and Zhou were arrested in Thailand on a U.S. warrant. After being extradited to face trial in New York, they pleaded guilty to a single count of conspiracy to bribe Marshallese officials.

Both were sentenced earlier this year. Zhou was deported to the Marshall Islands shortly after her sentencing, while Yan is due for release this November.

But although the federal case led to a brief burst of media attention, it left key questions unanswered. 

Who really were Yan and Zhou? Who helped them in their audacious scheme? Were they simply crooks? Or were they also working to advance the interests of the Chinese government? 

OCCRP spent nearly a year trying to find answers, conducting interviews around the world and poring through thousands of pages of documents. What reporters uncovered was a story more bizarre — and with far broader implications — than first expected.

As it turns out, Yan and Zhou were able to carry out their plans thanks to an earlier, successful ploy to buy high-level influence at the United Nations in New York.

In just a couple of years, the pair went from hawking scam miracle water to rubbing shoulders with world leaders and diplomatic grandees in Manhattan.

They gained access to the U.N. after paying over a million dollars to diplomats and fixers. Among those who helped them were staff of the former president of the U.N. General Assembly, an alleged Chinese agent, and a disgraced ambassador then already under investigation by the FBI in a separate case.

The couple also hijacked a charity affiliated with the United Nations and turned it into a base for Chinese businesspeople and scammers who wanted to appear associated with the global body. Ensconced in a flashy office on Manhattan’s Third Avenue, the duo and their associates met with officials and even heads of state from at least 17 countries.

Reporters also found that, by the time their schemes culminated in the Marshall Islands plan, the couple was also openly promoting Chinese interests in the increasingly contested Pacific.

Eryn Schornick, a Washington, DC-based transnational financial crime expert, said Yan and Zhou are part of what appears to be a growing trend of Chinese criminals and scammers who seek to associate themselves with the U.N. and the NGOs that surround it.

Yan and Zhou did not respond to reporters’ questions.

‘A Good Man’

As Yan stood for sentencing at a U.S. federal courthouse in mid-May, his Defence team attempted to paint the portly, fifty-something convict in a sympathetic light.

Born into a poor family in China’s eastern Anhui province, Yan had been given up as a baby to a family of beggars, his lawyers told the Southern District Court of New York.

A harsh winter killed both Yan’s adoptive parents when he was 10, forcing him to scrounge out a life on the streets before he finally returned to his biological family.

Later proving himself a gifted student, he began a successful career as a business consultant with an interest in international philanthropy. Yan’s lawyers described his Marshall Islands bribery scheme as a slip-up in an otherwise spotless life.

“For Cary, charity and giving back is a deeply felt obligation. It’s a fundamental part of who he is,” said one of his lawyers, Jonathan Bolz.

But there was a lot about Yan’s background — including a history of fraud back in China — that went unmentioned by either side during his trial. (Prosecutors at the Southern District of New York turned down OCCRP’s requests for comment).

Reporters found that Yan’s journey to the U.S. courtroom began in China a decade earlier, with a business based on the sale of a purported miracle water cure that a Chinese court later found to be fraudulent. 

Marketing material from Yan’s company describes the story as starting at a potassium salt mine owned by his family in China’s central Hubei province. As the story goes, a mishap one day in 2011 unleashed torrents of hot, briny water from the depths of the earth into the surrounding fields. After a local cowherd was supposedly cured of lupus after floating in the floodwaters, Yan and his brother began selling the liquid as a healing medicine under names including SSG Mineral Water and Genesis Life Raw Water.

But this $150-a-bottle miracle water was in fact a multi-level marketing scam. Promising investors that they could resell the water for a profit, the brothers defrauded nearly 20,000 victims out of more than $18 million, the Chinese court eventually found.

Yan’s brother was arrested in 2020 and sentenced to seven years in prison for his role in the scheme. Yan, however, had already moved abroad and beyond the reach of Chinese law enforcement.

‘Abusing the NASA Name’

Yan arrived in Silicon Valley looking to hype the product internationally. There, he met Zhou, who had first come to the U.S. as a student and was employed at a company working on a quixotic bid to build high-speed rail in the state.

The pair soon struck up a romance, according to former colleagues who worked with them in the U.S. Elegant and more than a decade Yan’s junior, Zhou also spoke fluent English. She soon became her partner’s international right hand.

In April 2014, the couple opened a spa in a strip mall in Santa Clara. Known as Immortal Float Center, the facility’s centerpiece was a treatment that combined Yan’s Chinese miracle water with spells inside a sensory deprivation tank dubbed the Immortal Digital Life Cube. The resulting effect was marketed as being “like the amniotic fluid of the uterus, flowing around the human body and regulating… its organs and systems.” 

But Yan was ambitious, and a suburban business next to a coin-operated laundry was not enough. To give his healing water more cachet, Yan sought to attach it to NASA, with its world-renowned scientific credentials.

He did this with the help of Wing Kan Nip, a Malaysia-born entrepreneur who worked on the same rail project as Zhou. Nip shared documents and recollections of his time with the couple after being contacted by reporters.

At the time, Nip had his own alternative medical business at a rented space at the NASA Ames Research Center in nearby Mountain View. Its centerpiece was a device called a  “quantum resonance spectrometer,” which purported to measure “frequencies” given off by people or materials. 

Nip said Yan asked him to use his device to test the water, and issue a report explaining its miraculous properties. Marketing materials obtained by reporters show that the NASA brand soon became key to selling the bogus product. Bottles of the water also carried labeling that implied they were manufactured at the NASA research park.

Nip said he had noticed that Yan and Zhou were “abusing the NASA name” not only in the U.S., but also in China, where he told investors that his product had been endorsed by the space agency. 

“I think his direction was trying to sell this product at a very high price, like a pyramid scheme,” Nip said. Nonetheless, he stuck with Yan and Zhou for another three years until they finally had a falling out.

NASA officials confirmed the use of the NASA logo for commercial products is a trademark violation, and said that they had been unaware of the unauthorized use.

‘An Incredible Amount of Fraud’

Yan and Zhou soon set their sights on building connections at the United Nations.

In early 2015, Nip was tasked with making this happen, he told OCCRP. His first point of contact was a New York-based businessman, Fan “Frank” Liu.

Nowadays, Liu is under indictment in New York’s Eastern District for allegedly working on behalf of China’s Ministry of State Security to harass dissidents in the United States. But back in 2015, he was simply known as a Chinese community leader and charity operator who, according to media coverage from the time, was a fixture on the diplomatic cocktail circuit that surrounds the U.N.’s Manhattan headquarters. 

Liu did not respond to questions from OCCRP.

Emails shared by Nip with reporters show that Liu and a close business associate, Jeanmarie Nicole Edwards, helped get Yan access to U.N. events and officials.

Yan was even able to get photos taken of himself alongside Ban Ki-moon, the U.N. Secretary General at the time, in return for payment. This effort was only the first of a series of photo-ops with U.N. grandees that Yan arranged with the help of paid fixers in an effort to raise his stature.

According to emails from Nip, the Ban photos were made possible thanks to an introduction Liu and Edwards provided with the office of the president of the U.N. General Assembly, a position then held by controversial Ugandan politician Sam Kutesa.

Based on this introduction, Yan and Zhou’s associate Nip traveled to San Francisco to meet Kutesa’s spokesman Jean-Victor Nkolo in mid-2015, the emails show. The spokesman promised Nip he could broker a meeting with his boss and other U.N. figures for hundreds of thousands of dollars in payments, according to an email Nip sent to Zhou soon afterwards.

After agreeing to the deal, Yan, Zhou, and an entourage traveled to New York. On June 29, 2015, they had a meeting and lunch with Kutesa during a high-level U.N. meeting on climate change. The following day, Kutesa’s staffers helped Yan get a rushed series of photos with Ban on the sidelines of an art event in which the bemused-looking former secretary-general can be seen holding a box of Yan and Zhou’s miracle water.

Kutesa’s spokesman, Nkolo, appeared to be proud of his work.

“Absolutely remarkable,” Nkolo wrote soon afterwards in an email with the photos attached. “That’s why one always need[s] a top professional photographer to beautifully capture memorable moments that should not be missed. Priceless.”

In response to questions from OCCRP, the U.N. Secretary-General’s spokesman, Stephane Dujarric, said that his office had become aware of Yan and Zhou’s activities during the course of a broader internal investigation, the contents of which he did not share with reporters. He confirmed the probe found that Yan and Zhou had indeed paid for their mid-2015 U.N. meetings, but that “none of these payments came through United Nations accounts.”

The U.N. investigation found that Yan and Zhou used proxies to send at least $150,000 from China disguised as “tuition fees” into a “shadow account” account run by Ugandan diplomats, Dujarric said. Nkolo resigned from the U.N. before the probe was concluded, he added.

Former Secretary General Ban “had no knowledge whatsoever of Mr. Nkolo’s activities,” and did not know that someone had paid to have a photo taken with him, Dujarric said. He added that Ban had since appointed a task force “to promote transparency and accountability in the functioning of the President of the General Assembly.” A report on its findings was presented to the assembly in March 2016. 

The associate of Liu who helped broker the deal, Edwards, told OCCRP that Liu received money as part of the arrangement but said she did not know how much. She said she was never involved in anything “illegal” during her work for Liu, which she described as consultancy.

Nkolo and Kutesa did not respond to reporters’ questions.

The incident comes as no surprise to Michael Jacobson, chairman of the Montessori Model U.N., a New York-based non-profit that teaches students about global conflict resolution. Jacobson hosted Yan and his retinue at one Model U.N. conference and accepted a donation from the Chinese businessman. He later regretted it, he told OCCRP.

In an interview, Jacobson described seeing a steady stream of questionable Chinese businessmen who wanted photos and other proof of their closeness to the U.N. The global body’s headquarters is a “watering hole for an incredible amount of fraud,” he said.

“The Chinese refer to the General Assembly as the ‘Golden Hall’,” he said. “If you’re photographed at the U.N. … you’re perceived to be a step above the average Chinese businessman.” 

Jacobson failed to do his own due diligence on Yan and his associates, he said, because they were introduced to him by a trusted middleman, who would soon — thanks to another case — become a public face of U.N. corruption. 

That man was Francis Lorenzo, an ambassador from the Dominican Republic to the U.N.

‘What the Heck is Going on Here?’

Yan and Zhou first engaged Lorenzo in mid-2015, according to internal emails and interviews with people familiar with the arrangement. They quickly came to rely on the Dominican’s network to achieve ever greater levels of U.N. access.

But in October 2015, within months of getting into business with the Chinese couple, Lorenzo was charged as part of a separate high-level U.S. probe. 

The scheme, described in media at the time as the U.N.’s worst financial scandal in decades, involved over $1.3 million in bribes paid by a Macau casino billionaire to Kutesa’s predecessor as General Assembly president, Antigua’s John W. Ashe.

Lorenzo eventually pleaded guilty to bribery and money laundering, but did not serve a prison sentence. 

Despite being caught up in a very public corruption case, he remained an influential figure who was able to shepherd Yan and Zhou through the U.N., reporters found.  

This was possible in part because he was well-liked in the diplomatic community, explained Carlos Garcia, a former El Salvadoran permanent representative to the U.N., who worked for Lorenzo in his dealings with Yan and Zhou.

“He made a mistake, obviously,” Garcia said, summing up the attitude of many in the U.N. “But that doesn’t mean that he’s not a human being, a good person, too.”

Lorenzo was still able to freely walk the halls of the institution at that time, and only lost his U.N. ID several years later, when it expired in August 2018, U.N. spokesman Dujarric confirmed in response to reporters’ questions.

Meanwhile, interviews and documents show that Lorenzo’s help to Yan and Zhou at the U.N. was facilitated by repurposing the same pay-for-play network he had used in the previous scheme to bribe Ashe. This included a staff of at least three employees who worked on tasks like web administration and event management.

Among the services he delivered was at least one more photo-op for Yan with Secretary-General Ban. But what Yan and Zhou really wanted was a more formal association with the U.N., according to interviews and emails obtained by reporters. To this end, they planned to create a non-profit organization that would then join the U.N.’s Economic and Social Council (ECOSOC), one of the global body’s six main organs.

Lorenzo hit on an ingenious solution. They would simply take over an NGO that had already been given the green light.

That’s when he approached Monica Westin, the Swedish-born founder of World of Hope International. This New York-based charity — which had ECOSOC accreditation — had long funded educational programs in West Africa. Westin, by then in her 70s, was worried about the organization’s future.

“[Lorenzo] contacted me and he said, ‘I have a very good opportunity for you… I want you to change your [charity’s] name,’” she recalled. “And then you will get all the help you will need for your organization in Ghana. You’re getting old. And if something happens to you, you will be taken care of.’”

At Lorenzo’s urging, Westin said she signed a memorandum of understanding that essentially turned over the organization to Yan. The charity was renamed the World Organization of Governance and Competitiveness (WOGC), complete with a logo that evoked the U.N. brand.

U.S. prosecutors would later reveal that Yan had paid Lorenzo $1 million to facilitate the takeover. Westin, however, said she received less than $10,000 of that amount. Through a lawyer, Lorenzo declined to respond to questions for this story.

With a growing staff, WOGC set up its headquarters in a glass-walled office tower in Midtown Manhattan, a short walk from the U.N. building. The organization billed itself as a charity geared towards achieving the U.N.’s Sustainable Development Goals. Its buzzword-heavy website featured pledges to reduce poverty by promoting public-private partnerships.

A procession of politicians, staffers, and U.N. diplomats from countries all over the world, including Mauritania, Maldives, El Salvador, and Bangladesh, came by the office. A typical visit involved formal-looking meetings around a conference table with views of the Midtown skyline, and group photoshoots in front of a flag-festooned wall, according to a cache of internal photos obtained by reporters. One delegation, from the U.N. mission for Sierra Leone, was gifted an oversized check for $50,000 during one 2017 visit in order to help the country recover from flooding. (The mission did not respond to questions.)

‘Lots of Gold’

The ECOSOC accreditation obtained by Yan and Zhou’s organization allowed it to organize a succession of U.N. events, starting with a glitzy launch in September 2016 during the meeting of the 71st Session of the General Assembly. Bangladeshi Prime Minister Sheikh Hasina was the keynote speaker, and actor-cum-crooner Robert Davi was the main entertainment. (Bangladesh’s U.N. mission and Davi did not respond to questions.)

A pattern was soon set. 

With Lorenzo’s extensive contact book, WOGC reached out to cash-strapped diplomatic missions from small and underdeveloped states to sponsor a series of events at the U.N., Garcia said. Yan and a procession of Chinese backers would cover the costs, using the meetings to collect even more photos and videos of themselves in the body’s rarefied settings.

Two former WOGC employees, who asked to remain anonymous over security concerns, said Yan solicited payments from other Chinese businessmen so that they could also appear to have U.N. backing. 

The whole scheme was “some dirty businessmen doing dirty business in China,” said one former employee involved with WOGC’s operations in New York. “They told Chinese people to lend money to them because ‘I’m from the United Nations,’” the former employee said.

Once he was in the door, Yan used his U.N. foothold to promote a new range of schemes, including at least three separate cryptocurrency scams that Chinese authorities would later find defrauded investors of at least $130 million.

To do this, Yan and Zhou established at least two other organizations that they falsely claimed to be linked to the U.N. Along with a now-convicted Chinese fraudster named Charles Lu and his entourage, they used their three organizations to help market their digital assets as safe investments.

Under the auspices of WOGC and one of the newer fraudulent organizations, Yan’s network convinced Suriname’s U.N. mission to host a “high-level meeting” on “Sustainable Tourism, Trade and Global Digital Assets” in the General Assembly hall on January 17, 2017.

A video of the event, which remains online on a U.N. website, shows Lu and other Chinese associates delivering speeches through live translators about the transformative power of blockchain technology, alongside Lorenzo’s employee, Garcia.

The event started with an extra bit of trickery: a supposed video address from U.N. Secretary General Antonio Guterres. In fact, Guterres was not speaking to participants at all –– the organizers had simply downloaded a previously-recorded video clip. (Suriname’s U.N. mission did not respond to questions).

Documents and photos obtained by OCCRP show Yan and Zhou coupled their New York-based activities with travel to destinations in Latin America, Asia, the Caribbean, and the Pacific Islands.

The group sometimes impressed visitors with a visit to their New York office before follow-up meetings were held abroad.

“I remember gold, lots of gold,” said Tessie Lambourne, the leader of the opposition in the Pacific nation of Kiribati, who visited the office in September 2017 when she was still in the country’s cabinet.

Two months later, Yan, Zhou and their entourage were in Kiribati, where they were warmly greeted by President Taneti Maamau and ministers. WOGC donated $10,000 for an event to promote locally-made clothing, Lambourne said. 

They walked away having secured i-Kiribati financial licenses for four companies whose names hinted at greater ambitions: World Digital Central Bank, World Digital Stock Exchange, World Digital Lottery Group, and World Digital Finance International Holding Group.

It was all part of the set-up for the plan to build the special economic zone in the Marshall Islands. 

‘A Big Red Flag’

Arriving in the country’s capital of Majuro in 2017, the pair found a country where resentment still festers over the legacy of the United States’ nuclear testing.

The special economic zone was billed as a way to finally clean up the radiation and enable the return of the thousands of displaced Rongelapese.

Kenneth Kedi, the speaker of Marshall Islands’ parliament, told OCCRP that he supported the plan because he believed the United States had not done enough to fix the damage.

The Chinese visitors’ proposals seemed outlandish, but he was reassured because they seemed to have the U.N.’s blessing, he said. “That was enough for me to say, ‘Wow, good, bring them over,’” Kedi said. “They must be a very good organization to be registered with the United Nations.”

By 2018, however, Kedi started seeing signs that Yan and Zhou were pushing a pro-Chinese geopolitical agenda.

His first awakening came when he was flown to Hong Kong in April 2018 for a “preparatory launch meeting” for RASAR. Held in the city’s AsiaWorld-Expo convention center, the event was preceded by a Chinese-language publicity blitz that included a glossy cover story in an official Communist Party-run magazine, Top China. 

With a bilingual cast of female presenters and dazzling on-screen graphics, the meeting featured special guests from the Marshall Islands, Vanuatu, El Salvador, and Honduras. Also in attendance were many of the Chinese crypto scammers who had been involved in Yan and Zhou’s activities at the UN.

Kedi said he was taken aback when he was handed the text of a speech to deliver at the event, which appeared to back Beijing’s claim that it was the sole legal government for all of China including Taiwan. The Marshall Islands is one of just over a dozen countries worldwide that diplomatically recognizes Taiwan, and Kedi said he refused to contradict that.

“They wanted me to talk about the ‘One China’ policy,” he said. “That was a big red flag right there.”

Kedi said he further soured the following year, when Zhou asked him to put his name on a letter, addressed to China’s foreign ministry, reassuring them that the autonomous zone was going ahead.

Endgame  

Westin, the founder of the New York charity Yan and Zhou had taken over, was at the center of the case that brought down the pair’s entire operation.

Westin said she was approached by the FBI in April 2019 and shared evidence that Lorenzo had helped Yan and Zhou take over her charity. Federal agents were able to build their case under the Foreign Corrupt Practices Act because they found evidence that the U.S.-based charity was used to facilitate the bribery of Marshallese officials.

“It’s no justice, because I could not raise any funds in the U.S. and my name was smeared because of this,” she said. The takeover finished off much of her charity’s work with children and communities in West Africa and left her with a smaller, financially strapped organization.

Among the questions from reporters that federal prosecutors declined to answer was  whether they had pursued a wider investigation into Yan and Zhou network’s activities at the UN.

There are loose ends to the case in the Marshall Islands too. 

The U.S. government has not publicized the identities of most of the local officials who were offered bribes, although court filings make it clear they included about half a dozen members of parliament and other senior officials. The State Department declined to comment.

And even though the Marshall Islands government says it does not know exactly how Yan and Zhou got their citizenship in the first place, the pair likely have nowhere else to go.

While Yan will remain in U.S. federal prison until near the end of this year, Zhou has already been released and deported to the Marshall Islands. She arrived in the capital, Majuro, on April 20 on a United Airlines flight wearing a bright red tracksuit, escorted off the plane by what appeared to be U.S. officials. 

Heine, the former Marshall Islands president, said she is worried about what Yan and Zhou may do next in her lightly populated Pacific nation.

“They can get into politics, because they’re citizens of the Marshall Islands,” said Heine. “If they bring the money to buy elections and get selected people in power, they can easily sway or direct the government the way they want. So that’s scary to me.”

Additional reporting by Dan McGarry, Bernadette Carreon, Rimon Rimon, Giff Johnson (Marshall Islands Journal), Hilary Hosia (Marshall Islands Journal), Indunil Usgoda Arachchi, Beauregard Tromp, and Chikezie Omeje.

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