Taichung prosecutors investigating Cotech Inc (磁震科技), a leading developer of aerospace composite materials, on Monday raided the company’s offices and took 20 people in for questioning, with prosecutors alleging company founder Ong Ching-long (翁慶隆) and others could be involved in market manipulation.
Ong’s wife, Shen Yu-wen (沈于文), was questioned and released on NT$200,000 bail yesterday.
Hsiao Ming-tao (蕭明道), a principal financial backer of Cotech, was released on NT$800,000 bail, along with two other company contractors.
Taichung prosecutors have issued a summons for Ong, who is on a business trip in the US.
Ong, Shen and other Cotech executives and major shareholders face charges for releasing false market information to attract investors and drive up share prices under the Securities and Exchange Act (證券交易法).
Ong, 69, was the deputy director of Aeronautical Systems Research Division at National Chung-Shan Institute of Science and Technology before he retired to found Cotech with his wife in 2002.
Using his knowledge of carbon fibers and composite materials, Ong and Cotech made inroads into aerospace, optoelectronics, automobiles, defense and other high-tech industry applications.
However, media reports said the Taichung-based company was not thriving, despite registering more than 40 international patents and it had lost money for most of its existence.
In the past year, Ong allegedly colluded with company executives and major shareholders to release positive market information, which said the company had been successful in a joint venture with UK automaker Jaguar to develop carbon fiber tires for exclusive use in Jaguar’s sports cars, Taichung District Prosecutors’ Office Deputy Chief Prosecutor Kuo Ching-tung (郭景東) said.
The news, which prosecutors said had no basis, prompted investors to buy Cotech shares, which rose from NT$10 to NT$45 per share withing a few days.
During that period, prosecutors allege Ong and other executives colluded with contractors to print Cotech paper stock certificates, which were sold for cash.
Ong is known for heading the development of new composite materials for production of Indigenous Defense Fighter jets.
Ong’s business successes include joint developments with Acer, ASUS and other local PC manufacturers to produce carbon fiber composite casing covers for laptop computers.
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