Chinese Couple Agree to Pay $3.75 Million in Fraud Case A husband-and-wife team that ran a Chinese maker of pollution control equipment agreed on Wednesday to pay $3.75 million to settle accusations that they had defrauded American investors. The settlement with the Securities and Exchange Commission came more than two years after the company, Rino International, at one time worth about $500 million on the Nasdaq stock exchange, collapsed after a short seller accused the company of claiming revenue from nonexistent contracts. More than three years ago, the company raised $100 million from American investors in a stock offering. The S.E.C. complaint said the company; its chief executive, Zou Dejun; and his wife, the chairwoman, Qiu Jianping; kept two sets of books. The Chinese books, which the S.E.C. said were correct, showed total revenue of $31 million from the first quarter of 2008 through the third quarter of 2010. The United States books, which were used in financial statements, showed revenue of $491 million, or about 15 times as much. The 2009 public offering, which raised $100 million by selling stock and warrants to buy more shares, valued the shares at more than $30 each, and they traded for as much as $34.25 in Nasdaq trading. They were delisted by Nasdaq in 2010 and now trade over the counter for about a nickel. As part of the settlement, Mr. Zou agreed to pay a penalty of $150,000, and Ms. Qui, $100,000. In addition, they agreed to pay $3.5 million to settle a related class-action suit. The S.E.C. said that days after the 2009 public offering, the couple, who together controlled 65 percent of the company's stock, used $3.5 million of the money raised to buy a home for their use in Orange County, Calif., then gave conflicting accounts to auditors regarding how the money was used. They eventually signed notes indicating that they had borrowed the money from the company. The fraud fell apart in November 2010 after the Muddy Waters research Web site, which seeks out stocks to sell short and has exposed a number of Chinese frauds, released a report saying some of the company's reported revenue came from fraudulent contracts with purchasers. The company did not deny the report, saying only that it would investigate, and the stock fell sharply. A few days later the company's auditors, Frazer Frost, reported that Mr. Zou had admitted that some of the contracts did not exist. The auditors withdrew their previous certifications of the financial results. On Nov. 30, the company sent a letter to the S.E.C. saying it intended "to file restated audited financial statements" for 2008 and 2009 "as soon as practicable." It has made no such filings since, and the company's Web site is no longer available.