Exclusive:US-Chinese businessman accused of using 'stolen profits' for £50m Scottish university donation

Three years ago, Dr Charles Huang made headlines after his eponymous foundation gave £50 million to his alma mater, the University of Strathclyde, allowing it to finance the creation of an innovation centre named in his honour. It marked the largest donation in the institution’s history and one of the biggest single donations made to any Scottish university.

Dr Huang has since stepped up his interests in Scotland, with one of his firms opening a new manufacturing plant in West Dunbartonshire. In June last year, Scottish Enterprise approved a £1.52m regional selective assistance grant as part of the development.

But now, the entrepreneur is embroiled in legal action in the US, where he is alleged to have moved funds from Pasaca Capital, an investment firm he founded and chairs, to the Charles Huang Foundation as part of what has been alleged in court documents as an “elaborate” scheme to defraud investors and divert profits.

In a lawsuit filed in the US, two former partners at Pasaca Capital claim the 60 year-old took out hundreds of millions of pounds from Pasaca’s bank accounts and those of its wholly-owned subsidiary, Innova Medical Group, before sending the money to his other companies, and the accounts of friends, family members and mistresses. They also allege he fraudulently transferred over $200m [£153m] to overseas emergency accounts for his own personal security. Such actions, they claim, amounted to a breach of Dr Huang’s duties as a director, and involved “intentional misconduct, fraud or a knowing violation of law”.

Neither Pasaca Capital nor the Charles Huang Foundation responded to enquiries from The Scotsman directed to Dr Huang and both firms. However, court filings show his lawyers have asked to have the complaint against him dismissed on the grounds the former partners have failed to state a claim upon which relief can be granted, and claim their lawsuit does not include “any facts” to suggest that money donated to Strathclyde was “somehow later funnelled into his entrepreneurial ventures”.

Until four years ago, Dr Huang and his businesses were little known in Britain. However, he came to prominence during the pandemic after Innova secured a series of UK government contracts for lateral flow testing kits. According to procurement analysts, Russell, the firm won 11 contracts worth a combined £4.2 billion.

Court documents allege Dr Huang is liable for conversion and civil theft for what lawyers describe as “a plethora of other fraudulent transfers”. The partners also claim assets acquired on behalf of Pasaca Capital amounted to “nothing more than additional executive compensation” for Dr Huang, including property, “exorbitant” personal travel expenses, and payment for sexual services provided by girlfriends and mistresses.

The ex-partners, Darren Marino and Mark DePietro, allege Dr Huang’s foundation was used to “surreptitiously transfer” Pasaca’s profits to entrepreneurial ventures without the knowledge of the firm’s board members or shareholders. They also allege that any charitable distributions made were for the purpose of “cloaking illegitimate and fraudulent offshore transfers”.

An amended complaint lodged with the US District Court for the Central District of California last month states: “Some of these stolen profits were diverted to defendant Huang’s supposedly charitable foundation and ultimately were donated to his alma maters, including $20m [£15m] to Wuhan University’s education and development foundation and $30m [£23m] to the University of Strathclyde. Of the monies donated to the University of Strathclyde, monies were invested in entrepreneurial ventures believed to be at least under partial control by defendant Huang.”

The university announced details of the donation in September 2021, describing Dr Huang as a “global business leader”. It said £30m of the donation would support a new advanced technology and innovation centre named after Dr Huang, with money also funding two professorial chairs, an annual entrepreneurship award, and five merit scholarship awards each year.

At the time, the university’s principal, Professor Sir Jim McDonald, said the “transformational gift” would have an “enormous impact on Glasgow and Scotland”. Dr Huang, who gained his MBA from the university in 1989, followed by a PhD five years later, said: “This gift is to show my gratitude to Strathclyde and to support those who have yet to embark on their studies.” He took part in a ceremony at the university and presented a £10m cheque - described by his foundation as “the first instalment of the grant”.

In July, Scottish Enterprise issued a press release detailing the package of support and funding it had provided to another of Dr Huang’s firms, called Innova NanoJet Technologies, which included the £1.52m grant approved in June 2023. The firm’s registered address is at Glasgow’s Inovo building, owned by the University of Strathclyde.

A spokesperson for the University of Strathclyde said: “The donation from the Charles Huang Foundation enables the university to expand its continuing collaborative work with business, industry and the public sector to tackle major challenges of our time.

“Dr Huang does not retain any control over the use of this gift and his foundation agrees its broad uses, which are to support research, student scholarships and entrepreneurship activities within the Strathclyde community.

“Innova NanoJet Technologies pays the university for rented space in our Inovo building. Strathclyde does not have any shareholding in the company.”

A Scottish Enterprise spokesman said: “The grant provided to Innova Nanojet Technologies in 2023 is supporting the creation of 195 new jobs in West Dunbartonshire as part of an overall company investment of £9m in a state-of-the-art manufacturing facility.

“The equipment made at the site will have applications across a range of industries, including public health, hospitality, retail, agriculture and transportation. As with any grant, this includes a contractual agreement, with milestones to be met and evidenced by the company for funding to be released.”