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Yahoo Sued by Former Chinese Prisoners Over Mishandling Humanitarian Trust Worth Millions

Embattled internet company allegedly misappropriated more than $17 million

A group of formerly jailed Chinese dissidents filed a lawsuit against Yahoo Tuesday in D.C. District Court accusing the Internet 1.0 giant of “willfully turning a blind eye” while the manager of a relief fund the company created following a settlement misappropriated more than $17 million (via Gizmodo).

In 2002, Yahoo complied with a request from the Chinese government to provide personal information about two Yahoo users, who were subsequently “brutally imprisoned” for 10 years for crimes against the state. The two dissidents and their families sued Yahoo, which was settled in 2007.

As part of that settlement, Yahoo established the Yahoo Trust “to provide humanitarian assistance to Chinese political dissidents imprisoned for exercising their freedom of expression,” according to the complaint, seeding it with $17.3 million in funding. The suit claims that Yahoo appointed itself, employees Michael Callahan and Ron Bell, and Harry Wu to oversee the trust, with Wu installed as the fund’s manager. But instead of using the money for its intended purpose, the suit alleges, Wu and the Yahoo employees presided over a fund that spent $13 million on items including real estate and exorbitant staff salaries, and only about $700,000 to help dissidents.

“Unfortunately, because Yahoo, Callahan, Bell, Wu, and others were primarily concerned with using the Yahoo Trust to further their own interests, as opposed to the best interest of Trust beneficiaries, they totally abdicated their fiduciary responsibilities to those beneficiaries, including by willfully turning a blind eye to rampant self-dealing and by engaging in such self-dealing,” the complaint alleges. “As a result, a breathtaking majority of the Yahoo Trust corpus–upwards of $13 million–has been systematically and unlawfully depleted in less than 10 years on expenditures having nothing to do with providing humanitarian assistance to imprisoned Chinese dissidents.”

Yahoo was acquired by Verizon earlier this year, which folded the company, along with fellow early internet icon AOL, into a new entity called Oath.