In early 2014, an Ohio packaging firm was facing the loss of $500,000 from a fraud it encountered when ordering machinery from a Chinese supplier, but was hopeful it could recover the funds.
Sunny Daga, president of the growing packaging film maker Wrap-Tite Inc. of Solon, Ohio, was confident back in March about eventually finding the $500,000 that was taken by fraudsters who hacked into the email system of China's Xinle Huabao Plastic Machinery Co. Ltd.
The fraudsters forged paperwork to convince Daga to wire the half million dollars into a different bank account from what was in the original sales contract.
Despite Daga's optimism, it turned out the Chinese bank and local police weren't able to help retrieve the fund or catch the criminals. It's not a total surprise, as international lawyer Dan Harris commented back in April that: “It's really hard — next to impossible — to catch the scammer and get your money back.”
The good thing is, it didn't become a roadblock to Wrap-Tite's ongoing expansion. The two companies worked out a solution that has helped Wrap-Tite to continue with its expansion plans.
“The supplier did his best to get cooperation from the bank and the police without any success. They have agreed to make up our loss through discount on our purchases. We have ordered a second machine and they have provided an additional discount on this as well,” Daga told Plastics News in an email interview.
Xinle's sales manager Kevin Zhao was equally pleased with the result.
“The client ordered a second line and we are working together very well,” he said. “We will not give up on the legal pursuit of the scammers, with the faintest trace of clue to solve the case.”
Xinle is ranked by the China Plastic Machine Industry Association as the sixth largest maker of plastic extrusion machinery and the 15th largest supplier of all plastic processing machinery.
The company's 2014 sales could exceed 250 million yuan ($40.2 million), CEO Ma Guoliang told Chinese media CPRJ in November. It also plans to build 120,000 square meters (1.3 million square feet) of additional manufacturing space for the production of cast film equipment.
I don't know how much the fraud loss will impact either company's bottom line in fiscal 2014, but the important thing is they resolved it with grace and now are concentrating on expanding their businesses.