Wash. Investment Adviser In $3.6M Ponzi Scheme Gets 9 Years
By Jon Hill of Law360.com
An investment guru who copped to fleecing investors out of more than $3.6 million in a nine-year Ponzi scheme was sentenced in Washington federal court on Thursday to serve nine years in prison and pay his victims more than $3.6 million in restitution.
Bellevue, Washington-based investment adviser Chris Young Yoo pled guilty in March to wire fraud and making false statements as part of a deal to cooperate with prosecutors in exchange for their recommendation of a lesser seven-year prison sentence, but U.S. District Judge Thomas S. Zilly opted for a sentence within the eight- to 10-year range spelled out under federal guidelines.
“You’ve destroyed [the victims’] lives, financially, emotionally and physically … your scheme went on for nine years. I think a nine-year sentence is appropriate,” the judge said at Thursday’s sentencing hearing, according to a statement from prosecutors.
Several of Yoo’s victims — whom prosecutors said he had picked out based on who was likely to have the highest degree of trust in him — spoke at the hearing and wrote letters to the judge describing how the scheme had affected them personally.
“I have lost everything I worked for, including money gifted to me by my grandparents and parents,” one victim wrote. “I have lost my future. I worked an honest job, packing my lunch to work each day to save. I thought I was making sound financial decisions, and trusting Yoo cost me everything.”
For his part, Yoo has apologized for his actions, asking Judge Zilly in a letter filed earlier this month to accept his “sincere regret and remorse” for the crime.
“I am very sorry for everything I did … I truly am sorry for what I had done to them,” Yoo wrote. “I know it is impossible for the victims to forgive me but I want to let them know that I am sorry for betraying them, defrauding them. The friendships and trusts they gave me, I failed them.”
While Judge Zilly seemed to have doubts Thursday about whether Yoo had expressed enough remorse, Yoo’s attorney, Michelle Peterson, told Law360 that her client is indeed “very remorseful.”
“The primary reason Mr. Yoo confessed and fully cooperated with the government is because he felt the only action he could take for the victims was to accept responsibility and punishment for his crime,” Peterson said in an email.
Yoo promised to pay $1.3 million and accept a bar from the securities industry in 2015 after the U.S. Securities and Exchange Commission accused him of lying to clients and breaching his fiduciary duty by failing to disclose a conflict of interest. But Yoo continued to solicit investments and use them for his personal benefit and to pay off past investors, prosecutors have alleged.
According to documents filed by prosecutors, Yoo created a company called Summit Asset Strategies LLC and managed two related entities that invested in debt and equities with a focus on South Korea. But from about 2006 to November 2015, Yoo channeled some client money into another account that he dipped into to pay operating expenses as well as other investors, whom he kept in the dark with falsified account statements.
Prosecutors said he also funneled some of that investor money into his own pocket, using it to buy luxury cars and cover the $6,000 monthly rent on a swanky Bellevue home.
While the SEC was investigating Yoo in 2014, he swore that the account belonged to a family member, and that payments he received from it were payback on a loan, but prosecutors said he continued to use it to rip off investors even after he settled with the SEC in late 2015.
Even though his companies’ names had been dragged through the muck, he told clients — including a church — that he would invest their funds in other financial instruments. Instead, he caused another $3.6 million in losses to 17 investors, prosecutors have alleged.
“This defendant thought he could lie, steal, and live the good life off his clients’ life savings,” U.S. Attorney Annette L. Hayes said in a statement. “Instead, he will be spending nine years in prison and many more years working to pay his clients back. Sadly, no matter what he does, he will never be able to make up for the betrayal and loss of peace of mind that he caused those who trusted him.”
Representatives for the U.S. Department of Justice were not immediately available for comment Friday.
The government is represented by Assistant U.S. Attorney Seth Wilkinson.
Yoo is represented by Michelle Peterson of Michelle Peterson Law PLLC.
The case is U.S. v. Yoo, case number 2:17-cr-00075, in the U.S. District Court for the Western District of Washington.
The team of investment fraud lawyers at Starr Austen & Miller LLP fights for the protection of investors and handles cases involving securities arbitration misrepresentation, overconcentration, broker fraud, negligence and breach of trust.