Score:   0.5
  Press Releases:
          A Bellevue developer who fraudulently obtained over $235 million dollars during his real estate investment scheme, including over $140 million from immigrant investors, was sentenced today in U.S. District Court in Seattle to four years in prison, announced U.S. Attorney Annette L. Hayes. LOBSANG DARGEY, 43, entered guilty pleas in January 2017 to two federal felonies, admitting that he defrauded immigrant investors, federal regulators, and institutional investors. DARGEY promised to use the immigrant investors’ investment funds in compliance with a federal immigration program designed to stimulate growth and create jobs. Instead, he secretly diverted tens of millions of dollars of investor funds to unauthorized uses and used falsified financial records in an attempt to obtain additional funding to make up the shortfall. At the sentencing hearing, U. S. District Judge Robert S. Lasnik said DARGEY engaged in “reckless behavior . . . putting these people in jeopardy of never achieving their immigration dreams.”

          “This defendant stole not just money but something that he knew from personal experience was much more valuable – the right to come to the United States and live the American dream,” said U. S. Attorney Annette L. Hayes. “Many of the investors that the defendant defrauded sold everything they had in China in reliance on his promises. They now live in limbo – with their money tied up in litigation and no idea of whether their dream to live in this country will come true.”

 

          According to records filed in the case, between 2012 and 2015, DARGEY recruited overseas investors, primarily in China, to fund two development projects – one in Everett, Washington known as the “Path American Farmer’s Market” and one in Seattle’s Belltown neighborhood known as the “Potala Tower.” DARGEY promoted the projects under the federal “EB-5” program, which allows immigrant investors to qualify for permanent residency if they create American jobs by investing $500,000 in a qualifying American business project. DARGEY represented to the immigrant investors and to the U.S. Department of Homeland Security that he was investing all of investors’ funds in the Everett and Seattle projects in compliance with program requirements.

          Contrary to his promises, DARGEY used tens of millions of investor dollars for uses not allowed under the federal program and not disclosed to investors. This included approximately $11.5 million of investor funds that DARGEY secretly used to pay unauthorized sales expenses, including sales commissions to Asian brokers. The money also went for lavish meals, expensive gifts, and cash withdrawals at casinos, and the purchase of a $1.4 million Bellevue home for a DARGEY business associate. DARGEY withdrew over $10 million in investor funds from the project as developer fees to fund his lavish lifestyle, including his purchase of a $2.5 million home in Bellevue.

          In addition, DARGEY told investors and the United States government that DARGEY would contribute $32.5 million of his own money toward the projects. In fact, DARGEY admitted that he did not contribute any funds to the projects. DARGEY’s fraud resulted in tens of millions of dollars in funding shortfalls for the EB-5 approved projects. DARGEY attempted to fill these shortfalls by using a falsified bank statement to obtain a $25 million construction loan, and by using altered financial statements to obtain $60 million in additional funding from a private institutional investor.

          Of the 281 foreign investors defrauded by DARGEY, none has received permanent resident status in the United States. A majority of the investors have had their applications denied because of DARGEY’s fraud, and are appealing the denials. Some wrote to the court explaining the damage DARGEY’s conduct caused:



Investor Y.Y. wrote: In order to provide our children with better lives and study environments, we sold our one and only real estate so as to accumulate money for the American EB-5 investment immigration [program]…. Lobsang’s illegal behavior has destroyed our immigration dream.





Investor Y.W. wrote: Many younger investors like me had to dramatically alter their life path. Some adults were forced to return to China without finishing their college degree.





Investor Z.C. wrote: “…because of defendant’s illegal behavior, it led us to live in fear and suffer huge mental damage because our lives can be cancelled at any moment…. My wife is so afraid that she dares not pick up the mail for fear of receiving a deportation notification.”



          “Mr. Dargey’s selfish greed twice robbed his investors as he seized both their funds and jeopardized their dreams for a future life in the United States,” said Acting Director of U.S. Citizenship and Immigration Services James McCament. “We are grateful to our many law enforcement partners who helped to deliver justice in this case and uphold the integrity of the EB-5 Program.”

 

          U.S. Citizenship and Immigration Services administers the EB-5 Program. Under this program, entrepreneurs (and their spouses and unmarried children under 21) are eligible to apply for permanent residence if they make the required investment in a commercial enterprise in the United States and plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers.

  

          DARGEY’s fraudulent conduct came to an end in August 2015, when the Securities and Exchange Commission filed a civil suit and won a court order freezing his assets. The FBI simultaneously executed search warrants at DARGEY’s offices in Bellevue and Everett.

 

          As part of his plea agreement in this case, DARGEY agreed to provide restitution of more than $24 million to the investors.

 

          The case was investigated by the FBI and is being prosecuted by Assistant United States Attorneys Justin Arnold and Seth Wilkinson. The Department of Justice appreciates the assistance of the Securities and Exchange Commission and U.S. Citizenship and Immigration Services in connection with this matter.

Score:   0.5
  Press Releases:
          SUNG HONG, 45, and HYUN JOO HONG, 41, a Clyde Hill, Washington couple were arrested this morning on federal charges they defrauded multiple clients out of hundreds of thousands of dollars, announced U.S. Attorney Annette L. Hayes. SUNG HONG, aka LAURENCE HONG or LAWRENCE HONG, and his wife, HYUN JOO HONG, aka GRACE HONG, held themselves out as experienced investment advisors with a track record of performance in order to solicit investor funds for their hedge fund, Pishon Holdings, and for management through separately managed accounts. Authorities are still assessing the total amount of fraud in the case, but since 2011, the HONGs have solicited several million dollars in investor funds from numerous clients, and the losses to just three victims exceed $500,000. The HONGs will make their initial appearance in U.S. District Court in Seattle at 2:00 today.

 

          According to records filed in the case, the HONGs recruited investors using religious organizations and shared religious beliefs. The couple claimed that LAURENCE HONG privately invests money for wealthy Korean families and that GRACE HONG holds a Series 65 securities license and previously worked for a large international investment firm. None of these statements appear to be true. Nor was LAURENCE HONG’s past history disclosed. The couple sent potential customers misleading and false investment prospectuses that contained an inaccurate record of their past investment performance and other plagiarized investment outlooks. They further misled investors as to the advisor fees they would charge and the amount of their funds that would be at risk.

 

          The HONGs used investor funds for their own benefit. One church in California invested $1 million with the HONGs and lost about $300,000 on a single trade. Still, despite the steep losses and a fee arrangement based on investment gains, the HONGs withdrew almost $150,000, ostensibly as advisor fees, from the church’s account. Another couple allowed the HONGs to manage their $180,000 in retirement funds only to lose $100,000 within less than a year. After meeting with the HONGs, that couple then invested their remaining retirement funds in the HONGs’ hedge fund, only for those funds to be redirected into GRACE HONG’s personal account. The HONGs used those funds to pay credit card bills and other personal expenses, including a $16,000 payment to a resort in the Bahamas for a HONG family vacation.

 

          Investigators have identified over $2 million in additional losses in several other investor accounts managed by the HONGs. The financial investigation to date has revealed investor money was used to pay for the HONGs’ extravagant lifestyle, which included a 9,000 square foot rental home in Clyde Hill; a 45-foot yacht; multiple high-end vehicles, such as BMWs, a Maserati, and a Lamborghini; and lavish vacations.

 

          The FBI is investigating the case and is still determining the number of victims and the amount of fraud loss. Those who believe they have information about this case, please contact seattle.fbi@fbi.gov or call 206-622-0460.

 

          The charges contained in the complaint are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

 

         Wire fraud is punishable by up to 20 years in prison.

 

          The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Steven Masada.

 

Score:   0.5
  Press Releases:
          SUNG HONG, 47, and HYUN JOO HONG, 42, of Clyde Hill, Washington were sentenced today in U.S. District Court in Seattle to lengthy prison terms for defrauding more than 55 clients out of $12.7 million, announced U.S. Attorney Annette L. Hayes. SUNG HONG, aka LAURENCE HONG or LAWRENCE HONG, was sentenced to 15 years in prison.  His wife, HYUN JOO HONG, aka GRACE HONG, was sentenced to six years in prison.  From 2010 until their arrest in June 2017, the couple held themselves out as experienced investment advisors with a track record of performance in order to solicit investor funds for their hedge fund, Pishon Holdings, and for management through separately managed accounts.   In fact, SUNG HONG had just completed a 33 month sentence for committing investment fraud when he launched this new scheme in 2010.  At the sentencing hearing U.S. District Judge Thomas S. Zilly said, “This scheme was a serious, complex fraud over seven years.  You targeted religious victims.  You used God as a way to gain trust…. You have emotionally and spiritually damaged these victims and most of them will never recover.”

            “Using faith and fraud, this couple stole millions from people whose dreams of a better life have now been shattered,” said U.S. Attorney Annette L. Hayes.  “Both repeatedly lied to their investors, all while spending their hard earned money on high-end shopping sprees, luxurious vacations, a yacht and an expensive rental home. Their victims now live paycheck to paycheck with college and retirement funds depleted and a very different financial future than they expected.”         

           According to records filed in the case, the HONGs recruited investors using religious organizations and shared religious beliefs. The couple claimed that LAURENCE HONG privately invested billions of dollars for wealthy Korean families and that GRACE HONG held a Series 65 securities license and previously worked for a large international investment firm. None of these statements were true.  Likewise, the defendants did not disclose LAURENCE HONG’s past criminal conviction for investment fraud. The couple sent potential investors misleading and false investment prospectuses that contained an inaccurate record of their past investment performance and other plagiarized investment outlooks.

          Throughout their fraudulent scheme, the HONGs used stolen investor funds for their own benefit, including payments for a 9,000 square foot rental home in Clyde Hill; a 45-foot yacht; multiple high-end vehicles, such as BMWs, a Maserati, an Aston Martin, and a Lamborghini; and numerous expensive vacations to locations such as the Bahamas and Beverly Hills. 

          One church in California invested $1 million with the HONGs and lost about $300,000 on a single trade. Still, despite the steep losses and a fee arrangement based on investment gains, the HONGs withdrew almost $150,000, ostensibly as advisor fees, from the church’s account. Another couple allowed the HONGs to manage their $180,000 in retirement funds only to lose $100,000 within less than a year. After meeting with the HONGs, that couple then invested their remaining retirement funds in the HONGs’ hedge fund, only for those funds to be redirected into GRACE HONG’s personal account. The HONGs used those funds to pay credit card bills and other personal expenses, including a $16,000 payment to a resort in the Bahamas for a HONG family vacation.

          Speaking to LAWRENCE HONG, Judge Zilly noted his prior conviction for a similar fraud:  “You clearly did not learn anything from the fact you were convicted and sentenced to prison…. You are one of those con men who will never be able to stop conning people.”  Judge Zilly noted that GRACE HONG played “an intricate and important role in the entire scheme.  She misrepresented her credentials… she took God’s name – she used that to entice investors to put money in their pockets.”

          Judge Zilly ordered the pair to pay more than $12.7 million in restitution. The losses for certain investors represented their entire life or retirement savings. 

            The case was investigated by the FBI.  The United States Attorney’s Office thanks the Commodity Futures Trading Commission (CFTC) for its assistance in the investigation.

          The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Steven Masada.

 

Score:   0.5
  Press Releases:
             A former Seattle Police Officer was sentenced today to 6 years in prison, and his co-conspirator in an interstate marijuana distribution scheme was sentenced today to 14 years in prison, in U.S. District Court in Seattle, announced U.S. Attorney Annette L. Hayes.  Former officer ALEX CHAPACKDEE, 44, of Seattle pleaded guilty in November 2017 to conspiracy to distribute marijuana and conspiracy to commit money laundering.  Ring leader TUAN VAN LE, 43, of Maple Valley pleaded guilty in December 2017 to conspiracy to distribute marijuana and conspiracy to commit money laundering.  At Chapackdee’s sentencing hearing U.S. District Judge Thomas S. Zilly said Chapackdee’s actions resulted in “[a] shame on his badge, his department, and on this community . . . and deserves to be punished accordingly.”

            “These defendants – including a sworn law enforcement officer – flouted all applicable law when they shipped hundreds of pounds of marijuana to the East Coast in order to make the biggest possible buck,” said U.S. Attorney Annette L. Hayes. “Marijuana remains illegal under federal law and shipping unlicensed and untaxed marijuana across state lines certainly is illegal under state law as well.  We will continue working with our federal, state, local and tribal partners to ensure that federal drug and money laundering laws are properly enforced.”

            An investigation by the FBI’s Public Corruption Squad, the Drug Enforcement Administration (DEA), the Seattle Police Department, and Homeland Security Investigations revealed that on multiple occasions between January of 2015, and April 2017, LE and others made repeated trips between Seattle and Baltimore.  While LE often flew one way or roundtrip, other members of the conspiracy made the trip by driving virtually non-stop.  The vehicles carried hundreds of pounds of marijuana to the Baltimore area and the cash proceeds back to Seattle.  CHAPACKDEE participated in multiple trips, driving his RV one or both ways in September, October and November, 2016, as well as in March and April 2017.  CHAPACKDEE -- who was an SPD officer throughout the conspiracy -- admits that while he was furthering the conspiracy he was armed and carried his Seattle Police Department badge.  CHAPACKDEE, LE and the other conspirators linked up at both ends of the trip, distributing the marijuana on the East Coast and then returning with the cash proceeds to Western Washington.  Bank records indicate CHAPACKDEE repeatedly deposited his share of the cash in his personal account, in amounts just under $10,000, thereby avoiding reports to law enforcement.  CHAPACKDEE used his status as a police officer to cover and protect the conspiracy. 

            The bulk of the proceeds were laundered into a marijuana growing/processing business, Tetra Holding Company (THC) that was ostensibly “legal” under Washington law and in the process of applying for a license from the State of Washington.  On paper, the business was owned by two of the co-defendants, LE’s nephew, Hoang Le and his girlfriend, MEIFANG YU, 45.  In reality, TUAN VAN LE was the primary investor, and was in control of the business.  However, as a convicted felon, TUAN VAN LE is prohibited under Washington State law from being an owner/investor in any permitted marijuana business.  TUAN VAN LE nonetheless provided his nephew, often through his girlfriend, with very large amounts of money to get THC up and running – close to $1 million dollars.

            MEIFANG YU was sentenced today to 3 years of probation, including 180 days of home confinement and 150 hours of community service for her role in the conspiracy.

            In addition to the prison terms both LE and CHAPACKDEE  will be on federal supervision following prison of 5 years and 4 years, respectively.  Both men have been in custody since their arrest on May 8, 2017.

            Coconspirator Samath Khanhphongphane was sentenced to 5 years in prison on February 8, 2018.  Defendants Phi Nguyen and Hoang Le will be sentenced on April 12, 2018.

           This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved. The case was investigated by the FBI, DEA, Seattle Police Department and Homeland Security Investigations (HSI). Multiple agencies assisted with the arrests and the serving of search warrants including the Port of Seattle Police Department.

          The case is being prosecuted by Assistant United States Attorneys Vince Lombardi and Justin Arnold.

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