Scams That Target Groups Gain Scrutiny
California Department of Corporations executives met with a dozen Korean American leaders Wednesday to spread the word about financial scams targeting ethnic, racial and religious groups.
It’s important for investors to be on guard, said acting Corporations Commissioner Wayne Strumpfer, because his investment-policing agency often learns of fraud only after the damage is done. That appears to have happened, he acknowledged, in the case of former Los Angeles investment advisor Won Charlie Yi.
Yi had seemed a symbol of financial success to many Korean Americans. But federal authorities accused him last year of operating a $36-million Ponzi scheme. The Department of Corporations later revoked his advisor’s license, but by then the alleged damage had been done.
“Most of government is reactive,” Strumpfer said. “By the time we receive the complaints the money is gone.”
Yi later returned to the United States and was arrested by authorities after being stopped in Arizona for allegedly speeding. He has pleaded not guilty to federal fraud charges and is awaiting trial.
Strumpfer and other regulators said investors could help protect themselves from con artists by taking such simple steps as checking whether someone pitching tempting investments is licensed as a broker-dealer or investment advisor. Such a check can be done at the Department of Corporations’ website or by calling the department’s toll-free number, they said.
Regulators said they hoped to work with such community leaders as Sunny Kwon, president of a Korean American insurance and financial professional association, to schedule presentations for investors.
The outreach program is intended to be the first of many, said Theresa A. Finger, a Department of Corporations special project manager heading up the effort.
Other groups that will be targeted in the education effort include church congregations and military-base personnel, Finger said. Those groups and many others bound together by religious, ethnic or social ties have frequently been victimized by “affinity frauds” that exploit bonds of friendship and trust.
Investors often can determine whether promoters have previously run afoul of the law by simply running their name through an Internet search engine, noted Alan S. Weinger, acting head of enforcement at the department.
He noted that Nia S. Cano already had been convicted of investment fraud in Utah when her company, Alternate Business Capital, allegedly was selling bogus investment contracts last year to Korean Americans, many of them in Orange County.
A Web search would have warned investors by revealing a 1998 lawsuit in which the Federal Trade Commission accused Cano of operating a pyramid scheme, Weinger said.
