Sued One Day, Appointed the Next
Stock-trading advisor Timothy Cho of Irvine was named Tuesday to a national business panel, one day after federal regulators sued him for false and misleading advertising.
U.S. Rep. Tom DeLay (R-Texas) appointed Cho as one of 15 business executives from California named to the Republican Business Advisory Council, which is part of the National Republican Congressional Committee. The panel advises GOP leaders on business reform.
In a statement released Tuesday, DeLay said Cho has long supported Republican ideals such as debt reduction and tax reform and will be “a key member of the council.”
Representatives for DeLay and the council couldn’t be reached late Tuesday for comment on the Federal Trade Commission’s suit alleging that Cho’s company, Timothy Cho Investment Corp., wooed novice investors with promises of guaranteed returns.
Cho, who has denied the FTC’s allegations, said he didn’t discuss them with DeLay or the business council before his appointment. Cho’s problems with federal regulators extend back to May 1999.
“A Republican doesn’t like government regulators anyway,” Cho said.
California Democratic spokesman Bob Mulholland said the appointment is an example of the GOP putting the interests of business before the public.
“To be appointing people who are charged with financial fraud is a crime,” Mulholland said. “But it won’t embarrass the Republicans. These are the people they’re friends with.”
Cho said regulators began investigating the activities of day traders in 1999 and zeroed in on his company, at which day trading is a small part. He denied that he or his company engaged in wrongdoing and said the timing of the lawsuit was suspicious.
“As soon as President Bush got elected, they wanted to hurry up and get the complaint filed” before new GOP appointees took over the department, he said.
This month Bush is expected to replace FTC Chairman Robert Pitofsky with Timothy J. Muris, an antitrust professor backed by conservatives.
The FTC is asking the U.S. District Court in Santa Ana to order Cho and his company to stop making allegedly false claims about day trading in the company’s investment seminars and to repay customers or turn over any “ill-gotten gains.”
It was the seventh such lawsuit filed by the FTC since May, when the agency began a crackdown on stock trading advertising in conjunction with the Commodity Futures Trading Commission and the Securities and Exchange Commission.
Since then, courts have stopped the claims of 14 online firms, the FTC said.
But Cho said his company, based in Irvine with 12 offices nationally, was sued even though federal regulators received no complaints about its business practices. He called the suit a “perfect example” of misplaced government zeal.
