The Complicated Legal Backstory of Terry McAuliffe's Former Car Company

According to the judge's advisory opinion, Yang Rong, aka Benjamin Yeung, originally worked with Wang to launch Hybrid Kinetic. The company that owned it—Hybrid Kinetic Automotive Holdings, which was actually owned by Yeung's wife—accused Wang of executing a corporate coup, absconding with Hybrid Kinetic shares and issuing them when they weren't his to sell. Wang, in turn, accused Yeung of reneging on a promise to supply $200 million in startup funds for the hybrid car project and effectively abandoning the project, a claim backed up by a former Securities Exchange Commission lawyer who submitted an affidavit.

Yeung was at one point wanted in China for alleged "economic crimes," according to state news agency Xinhua, and has been identified by the South China Morning Post and Reuters as a fugitive of mainland China—a distinction he "never attempt[ed] to rebut" in his communication with the U.S. court in the lawsuit with GreenTech's eventual founders, the judge wrote. The U.S. State Department could not confirm Yeung's status as a Chinese fugitive, and the Chinese embassy to the U.S. could not be reached for comment.

The disagreement was messy, and the two sides settled, with Wang eventually dropping the name Hybrid Kinetic and launching GreenTech. Hybrid Kinetic Motors continued as a separate, competing project in Alabama.

U.S. District Judge Michael P. Mills showed a clear sympathy for Wang over Yeung in his June 2009 opinion. That Yeung's wife owned the holding company, Mills wrote, "color[ed] Yeung's dealings in [the] case with a sense of dodginess." The legwork done by Wang and eventual GreenTech Executive Vice President of Finance Gary Tang on Hybrid Kinetic's business plan impressed Mills, who saw the basic premise as something that could work if given the chance, according to the opinion he wrote on their lawsuit.

But Mills concluded that Wang's conduct in issuing shares—while continuing to accept funding from Yeung's wife's holding company—was "something this court can not [sic] condone."

"While Wang appears to have been quite honest with this court, he has admitted to engaging in conduct of dubious legality," Mills wrote.

McAuliffe didn't know about that, according to his campaign. He did, however, know about the legal dispute.

While his campaign told ABC News that McAuliffe "never had any role with" Hybrid Kinetic—and while its dispute long predated McAuliffe's involvement—he received a $25,000 donation from one of its top executives, Jack Deng, during his first run for governor in December 2008, according to public campaign-finance records in Virginia.

McAuliffe got involved with the GreenTech project in late 2009, according to his current campaign—months after the settlement. In March 2010, he would buy a minority share, 25 percent, of GreenTech and become chairman. McAuliffe left GreenTech in December 2012, but he still retains his ownership stake, according to his campaign.

GreenTech did not respond to a request for comment about its executives' history with Yeung. Neither did Wang. A request for comment from Yeung, submitted through Hybrid Kinetic Motors (Yeung's competing Alabama project), went unanswered.

In July, however, it was revealed that the SEC has been investigating GreenTech, a Republican senator began raising national-security concerns with its funding plan, and McAuliffe's political opponents now email reporters daily about GreenTech's struggles, contesting McAuliffe's record as a jobs creator.

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