Vietnam Business Plan Ends in Limbo

The success stories of capitalism--the ones about people with vision turning opportunity into riches--usually boil down to two components: bold action and a bit of luck.

Son Hung “Sonny” Luu had the boldness. But the luck part didn’t quite hold up.

Luu, a prominent businessman in Westminster’s Little Saigon, returned to his native Vietnam four years ago, hoping to parlay his personal connections into multimillion-dollar deals to build a computer-components factory and create a cellular telephone system in Vietnam.

But in a murky turn of events, including accusations of forged investment documents, the deals fell apart. Now Luu, a naturalized U.S. citizen, is stranded in Vietnam, barred from leaving the country as he faces formal charges that he falsified state documents.

“I didn’t do anything wrong,” Luu said recently by telephone from Ho Chi Minh City. “It’s very frustrating.”

As the U.S. Congress moves toward ratifying a long-awaited bilateral trade agreement with Vietnam this fall, Luu’s predicament points up some of the dangers of having a business deal go bad in a place where millions have died in the fight between capitalism and communism.

In some instances, the consequences of failure have been severe. One leading Vietnamese businessman has already been executed, and two others were sentenced to death after their businesses collapsed amid allegations of fraud.

Quan Trieu Tran, 44, was luckier. Tran, who divided his time between his brother’s house in Irvine and his own home in Quebec City, was imprisoned 4 1/2 years ago after a $1-million cotton sale he brokered fell through. Tran has since been freed and returned to Canada.

Luu said he hopes his case will have a similar end.

Surprisingly, Vietnamese American businesspeople in Westminster’s Little Saigon--a hub for low-level trade between the U.S. and Vietnam--have been slow to defend Luu and others, dismissing the arrests as part of the risk of doing business.

“If you do everything right, then you don’t have to be afraid,” said Patrick Bui, executive director of the Vietnamese American Chamber of Commerce. “ . . . Every year, you have hundreds of people doing business over there, and [trouble] happens only to one or two.”

Virulent opponents of Vietnam’s communist regime also have been silent about the arrests, even though Luu is from their own community.

“The sentiment is that he’s doing business with Vietnam and he knows what he’s getting into,” said Lan Quoc Nguyen, a Westminster attorney and anti-communist activist.

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Luu, 56, was among the early entrepreneurs to set up shop in Little Saigon 15 years ago, when it was a suburban strip of mostly undeveloped land.

Luu and his wife, Tuyet Tran, were part of the first wave of refugees who fled Vietnam after the Communist takeover April 30, 1975, Tran said. They arrived at Camp Pendleton and a couple of months later moved to Washington state, where Luu helped fellow immigrants fill out government forms and applications.

Two years later, Tran said, they moved to San Diego and Luu opened an insurance agency. The couple moved to Westminster in 1980--about the time their only child, a son, was born--as word circulated among Vietnamese refugees that an expatriate community was forming in the city.

Luu opened a tax-preparation business and spent most of the next 15 years working long hours to make the business profitable. That ambition, Tran said, was one of the strains that eventually collapsed their marriage. The couple divorced in 1997.

“He was such a hard worker, we didn’t even have dinners together,” Tran said.

By then, Luu already was immersed in his dream venture in Vietnam.

In 1994, President Clinton lifted the trade embargo against Vietnam, unleashing a small flood of Western investment there. In 1996, Luu said in an e-mail, he joined the ranks of the hopeful.

Luu was a central figure in the merging of several smaller firms into Harrison Digicom and its subsidiary AirTel USA, based in Costa Mesa, according to company documents filed with the U.S. Securities and Exchange Commission. The plan was to build a $25-million computer-components factory near Ho Chi Minh City through a Vietnamese subsidiary called ETMC, and to establish a cellular telephone network.

Luu circulated a prospectus among friends and potential investors--including some of his tax clients--to raise money for the venture. How much was raised remains unclear, but the deals in Vietnam began unraveling in 1998 as some of the initial investors discovered that Luu did not have access to $13 million in additional money promised in the prospectus, some of those involved said.

Denton Guthrie, one of Luu’s initial investors, said the problem was noticed after he and other investors began “due diligence” reviews of the company’s operations. They discovered that the prospectus included a cover letter on stationery from a Big Six accounting firm that was a forgery. The prospectus itself promised “revenue streams” that Guthrie said weren’t available.

Luu said in an e-mail that he also learned the cover letter was a forgery, but he said he did not know who was behind it. He said he thought it originally had been prepared by a Vietnamese accounting firm in conjunction with the Big Six firm under contract with Harrison and ETMC.

“I don’t think they were out to set up a scam,” said Guthrie, a Montebello accountant who was among a group of investors who took control of the company in June 1998 and forced out Luu. “They were honestly trying to develop communications systems in Vietnam. A certain amount of funds were spent for travel to and from Vietnam and for the entertainment of government officials, which is normal in international business. But outright stealing, I don’t believe so.”

Luu said in an e-mail the business deals eventually fell apart largely because of the Asian financial crisis and delays in getting a government license. But he said he resigned on his own over disagreements with corporate officials over the direction the projects should follow.

The new board of directors formally ended operations in Vietnam by November 1999 and wrote off nearly $4 million in losses. Early this year, it renamed itself Infinite Networks, based in Norfolk, Va., and now is seeking new investors for international telecommunications projects.

“We wrote it all off and tried to remove ourselves as far away from it as we could [because of] the potential liability and everything,” said John Bush, who took over as the firm’s chief executive officer in October 1998. “It was not a real good scene.”

After Luu fell out of favor with his American backers, he ran into trouble with Vietnamese officials in early 1999.

Details of his legal problems there are hard to verify, but copies of documents Luu said he filed with the Vietnamese government and provided to The Times indicate that the charges center on notes from an Oct. 23, 1997, meeting with then-Deputy Prime Minister Ngo Xuan Loc, who oversaw industrial, transportation and communications programs for the government. Officials at the Vietnamese Consulate in San Francisco have declined to comment about Luu’s case.

Luu and two colleagues in Vietnam were accused of forging government documents related to that meeting. Luu, however, maintains that he simply translated informal meeting minutes into English for use by their American colleagues with AirTel.

After his arrest in January 1999, Luu said, he spent six months in jail before officials released him to the custody of relatives in Ho Chi Minh City and barred him from leaving the country. Luu and his relatives declined to discuss the case in detail, saying they fear antagonizing Vietnamese government officials.

But Luu’s predicament has had a chilling effect on at least one businessman: his brother, Dung.

Dung Luu traveled often between the two nations as a furniture importer but stopped abruptly when Sonny Luu and his two colleagues were arrested.

“We return to help our homeland, but we are greeted with harassment and have to return back home to the U.S. empty-handed,” the brother said, describing a business environment with no clear laws and persistent bribery. “I was scared so I came back here. . . . The law changes depending on who you talk to and how they feel that day.”