Bank Customer Charged With Gold Coin Fraud

A customer of SafraBank California in Encino was free on bail Thursday after being arrested for allegedly using counterfeit gold coins to defraud the bank of $13.4 million.

Tzyy Bin Chen, of Queens, N.Y., was arrested by the FBI in New York on Wednesday but pleaded innocent to the charges at an arraignment. He was released after bail was set at $3 million with a $50,000 cash security payment, said Assistant U.S. Atty. Peter K. Vigeland.

Chen’s lawyer, Paul P. Rao Jr., declined comment on the charges pending further study of the government’s case.

In a criminal complaint filed by the U.S. Attorney in New York, Chen, 32, was accused of borrowing the money in several transactions dating back to July, 1989, after pledging gold coins from the People’s Republic of China as collateral. But “in fact, the vast majority of the coins were and are altered and counterfeit,” the complaint alleged.

Chen, through his CTB Trading Co., initially deposited the coins at SafraBank but later deposited many of them at a Manhattan office of Republic National Bank of New York, according to the complaint. The banks are affiliated; international banker Edmond J. Safra owns SafraBank and owns about 28% of Republic New York Corp., the holding company for Republic National.

Last month, a SafraBank executive “became concerned” about the number of coins involved in Chen’s account and asked to see some of the coins deposited at the New York bank, the complaint stated. The executive “immediately realized that they were altered or counterfeit,” and the FBI was called in to investigate, it added.

SafraBank issued a one-sentence statement saying “the bank will have no loss as a result of these transactions,” but declined to elaborate.