(Yicai Global) May 6 -- The head of Buchang Pharmaceuticals, a traditional Chinese medicine maker, has refuted media reports that claim that his family paid USD6.5 million to get his daughter admitted to study at Stanford University. The firm's stock has slumped. 

Zhao Tao and his wife hired Rick Singer as an overseas study consultant through a third-party entity and donated money to his non-profit foundation with an understanding that the proceeds go to help students who can't afford Stanford's tuition, the Los Angeles Times reported. 

Buchang's share price [SHA:603858] has fallen by the daily limit of 10 percent to CNY28.7 (USD4.30) today. 

Stanford University has received USD770,000 through Singer's Key Worldwide Foundation for its sailing program, the Californian institution posted on its website. This involved three transfers, linked to three applicants, two of which were not admitted. 

Stanford found some of the third student's application documents to be false, so it rescinded that student's admission, the university reported on April 2. It did not reveal the person's identity. 

The student's mother considered her daughter as a victim of a scam, according to a statement from the family lawyer. The mother's intention was to support the charitable foundation and she denies any bribery, the statement added.

"We are working to better understand the circumstances around this student and will take whatever actions are appropriate based on what we learn," Stanford posted on its website, regarding the third student. 

Founded in 1993, Shandong province-based Buchang makes medicine to treat diseases including cardiac and digestive ones and its controlling shareholder Zhao has majority stakes in as many as 20 overseas companies, according to the firm's prospectus.

Editor: Emmi Laine