A representative of Mr. Xie wrote to XIO on Dec. 30, 2016, demanding an explanation of how XIO’s investments were performing and how the J.D. Power deal was funded. “We have never received the level of information which we should have,” said the letter, which the Journal reviewed. “This is a very unsatisfactory situation and not one that we can allow to continue.”
In February 2017, Mr. Xie sued in a Cayman Islands court, accusing XIO’s Ms. Li and Mr. Pacini of agreeing to take his money and then receiving “secret profits” in an alleged fraud. He also sued Ms. Li in Hong Kong.
A spokesman for Mr. Xie declined to comment, as did a lawyer for Ms. Xie.
At a meeting in 2017, which was not attended by Mr. Xie, Ms. Li likened Mr. Xie’s contention that he had entrusted money to XIO to a man unexpectedly claiming paternity of a child, said a person who was present.
XIO has said it raised a $3.2 billion investment fund in 2014 with a diversified group of investors it didn’t name that included fund managers and insurance companies, including some from Asia. XIO says Mr. Xie isn’t one of its investors and never was.
After buying J.D. Power, XIO hired new executives for the California-based company and expanded its operations with the purchase of National Appraisal Guides Inc., a U.S. publisher of vehicle pricing data. XIO is “tremendously proud of the success of J.D. Power and its premier position of ‘voice of the consumer,’ ” the XIO spokesman said.
In July, XIO had J.D. Power borrow $180 million more, in part to fund the acquisition. This made J.D. Power’s debt “very high,” Moody’s said. In July it downgraded J.D. Power’s credit deeper into non-investment-grade territory, to B3 from B2.
Another purpose of the borrowing was to enable J.D. Power to pay dividends of about $100 million, according to Moody’s. XIO declined to name the investors who would receive these dividends.