California Ponzi Scheme Preyed On Korean-Americans

Santa Ana, CA – On March 9, 2010, special agents for the Federal Bureau of Investigation arrested a California man and his girlfriend for allegedly running a Ponzi scheme that defrauded 60 people out of $8 million. The pair have been charged with federal wire fraud and are now facing up to 80 years in prison.

According to an FBI press release, Mr. Euirang Hwang and Ms. Sang Yi were the operators of an investment company called Pinupito, Inc. that “promised investors annual returns of up to 45 percent”. Supposedly the company was producing these enormous returns by “buying smaller companies in Korea, growing them, and selling them for a large profit”.  In actuality, the millions of dollars received from investors were either used to finance Hwang and Yi’s luxury lifestyle or were funneled back to previous investors  to serve as a cover for the “returns” that they were supposed to be receiving.

Victims of the scheme were made to believe that they were buying into a successful investment firm with “extensive holdings” in real estate and Korean businesses. Mr. Hwang, who falsely claimed to be a billionaire, served as chairman while Ms. Yi handled the financial end of the company. Authorities say that they primarily did their shilling to fellow Korean-American citizens, even doing some of their networking at Korean churches.

This kind of Ponzi scheme is referred to by the Securities and Exchange Commission (SEC) as an “affinity fraud”.  Just as Bernie Madoff focused on getting investors from the Jewish community in New York and Florida, Mr. Hwang and Ms. Yi similarly targeted members of their own ethnicity. What makes these scams so successful is that the fraudsters use their ability to relate to those of their own culture as a way to gain influence. These individuals generally appear trustworthy and successful, so they may already be admired by others in their community. This makes it easy for them to take advantage of those who are interested in making fast money.

To avoid being a victim of a Ponzi scheme, the SEC says that before you invest money in something, you should check out everything relating to it, especially the person in charge of the investment. If you’ve already been victimized, you should contact the SEC immediately to file a complaint.

Posted by on March 10, 2010. Filed under Crime - Punishment,Criminal Justice,Money,News,News and Opinions with Selena Robinson,US Criminal Justice,WorldNewsVine. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.