Federal authorities on Tuesday arrested a San Gabriel Valley executive accused of defrauding two banks of $9 million, including one institution that received taxpayer funds as part of the U.S. Treasury's bank bailout, according to prosecutors.
Chung Yu “Louis” Yeung, 37, of San Dimas was indicted last October on charges of bank fraud and conspiracy, but the indictment remained sealed until his arrest. A second man, Guo Xiang “David” Fan, 52, was also indicted on the same counts as well as money laundering. Fan remains at large.
Fan was the president and Yeung the vice president of Eastern Tools and Equipment in Ontario, which sold portable generators and other equipment. According to the indictment, Fan and Yeung are accused of defrauding United Commercial Bank and East West Bank by inflating the amount of business done by the company so they could obtain a large loan.
Prosecutors allege that Yeung, Fan and others set up about 20 shell companies with bogus business name statements, post office boxes, bank accounts and telephone numbers to give the appearance that the company was conducting a lot more business than it actually was.
They transferred money from their company’s accounts into the shell companies and siphoned off funds into their personal accounts, authorities alleged in the indictment.
East West Bank sustained a loss of $9,157,172 because of the scheme, prosecutors said.
East West Bank took over the accounts of United Commercial Bank, which failed in 2009. United Commercial Bank's parent company received $298.7 million in funds from the Treasury's Troubled Asset Relief Program, according to a Department of Justice news release. The government wrote off the millions in losses after the bank’s failure, the department said.
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