Investment Firm Raided in Fraud Investigation : Business: Illegal or nonexistent commodities trading is suspected. Customers, many of them Chinese American, say they’ve lost everything.

Investigators are poring through the records of a San Gabriel commodities brokerage that they raided and shut down last week to see whether the business actually invested the millions of dollars it collected from customers. The business had targeted the Chinese American community.

On March 2, investigators with the state Department of Corporations and the federal Commodity Futures Trading Commission, along with San Gabriel police and representatives of the district attorney’s office, raided Lida International Financial Data Inc. in San Gabriel. Simultaneously, authorities in Northern California raided a sister business, Worth Financial Data Inc., in San Francisco.

The investigating agencies allege that Lida sold gold, silver and currency futures illegally over the last three years. They say Lida and Worth, both owned by Topworth International of Hong Kong, sold futures primarily to Asian residents of California but did not register their brokers with the trading commission. Officials also alleged that the futures, if they existed, were not traded on regulated exchanges, as required by state law.

Spurred by complaints from disgruntled investors who told authorities that they lost everything, the Lida investigation is one of several in recent years that have focused on allegedly fraudulent investment schemes in the San Gabriel Valley’s Chinese American community.

Investigators refer to such cases as “affinity fraud,” where members of one group--in this case mostly Chinese Americans--gain the trust of others through their community ties.

Lida has operated out of a white stucco building on San Gabriel Boulevard for about three years. In that time, officials estimate that more than 5,000 people, mostly of Asian heritage, invested at least $10 million with Lida.

“We’re looking for evidence that there was any trading at all,” said Department of Corporations spokeswoman Lindsey Kozberg. She said criminal charges would be filed if it is determined the trading did not occur.

Kozberg said investors were told their money was being sent to Hong Kong to be traded in a precious-metal and foreign-currency exchange there. Authorities believe the exchange was not being regulated by Hong Kong officials. Authorities said it is extremely difficult to recoup money from fraudulent investment schemes, particularly if the funds have been sent overseas.

Lida and Worth have been barred from doing business by the state pending a federal court hearing later this month. Investigators seized Lida records and have frozen about $300,000 in Lida assets and about $75,000 in Worth assets.

Investigators continue to sift through records to determine who was working for Lida, who the investors were and how much money was invested. A court-appointed receiver who has taken over the Lida office is searching for all assets and will set up a claims procedure for investors seeking the return of their money.

Neither Lida Senior Vice President Allen Yang nor General Manager Duvan Chiang could be reached for comment. When investigators raided the building, Lida employees were training a new class of about 30 salespeople, many recruited from USC and UCLA.

Officials said Lida offered clients a virtually impossible combination of high returns and low-risk investments. The sales pitches varied, Kozberg said, but one investor told investigators she was promised a $2,000 monthly return on a $20,000 investment. However, a few months later, the woman closed her account with less than $1,000 in it.

Other investors told the Department of Corporations that it became increasingly difficult to obtain information on their accounts as they began losing money. Kozberg said investors were not receiving regular statements on their accounts.

“We found that people were opening accounts with $20,000 and closing them with less than $500,” Kozberg said.

“Within the first two weeks, some received statements indicating a profit,” she said. “But two weeks later they would find they had lost their $20,000. They would get margin calls, in which they were told they would need to supply more money to keep their accounts open.”

Some investors who lost money were even urged to join Lida or Worth as salespeople in order to earn money to recoup their losses, Kozberg said.

One Lida investor, who asked not to be named, said he invested about $20,000 last year and lost it all.

“When I first invested with them they told me they were licensed with the proper authorities,” the San Gabriel Valley man said. “Their offices are very plush, they have computers showing the commodities tables and they seemed real professional.”

But within four months, he said, Lida informed him he would have to send more money in order to keep his account open.

“There definitely needs to be more education on this issue in the Chinese community,” said Monterey Park Mayor Pro Tem Judy Chu, whose city was the scene of a raid by commodities investigators last year.

Last January, state and local investigators raided the Monterey Park, Pasadena and Los Angeles offices of a Hong Kong-based investment conglomerate called Jin Bao for allegedly trading off the legitimate market.

In another highly publicized case, federal authorities shut down East Ocean International Inc. in 1992 for allegedly running an illegal Pasadena commodities pool and bilking 100 Chinese American investors of more than $1 million.