Newport lawyer sentenced to more than 5 years for $8 million investment scam
A Newport Beach lawyer accused of stealing at least $8 million that he promised to invest on behalf of his clients was sentenced Monday to five years and three months in federal prison.
A federal judge rejected Stephen Young Kang’s request for a three-year sentence.
Kang pleaded guilty in November to two felony counts of wire fraud and one felony count of tax evasion, according to the U.S. attorney’s office in Los Angeles.
Federal prosecutors alleged that Kang, 46, had been scamming clients since 2002. An indictment released in September accused him of collecting clients’ investment money and spending it on personal expenses and luxury goods.
During Monday’s sentencing, several of Kang’s clients described how his fraud scheme affected them financially and emotionally, according to a news release from the U.S. attorney’s office.
Two of the victims said Kang’s actions led to the “darkest years” of their lives.
In a plea agreement, Kang admitted that the victims included Ottogi America Inc., a food distributor that wired Kang $3.7 million to buy property in Gardena. Instead of purchasing the land, Kang transferred the money to other bank accounts he controlled and used some of it to partially pay back other victims, including one in Texas who trusted Kang with $500,000.
Prosecutors alleged that even while he was facing the felony charges last year, Kang cheated the Texas victim again by offering to pay back the initial investment with interest from a life insurance policy. However, the U.S. attorney’s office said, he failed to mention that the policy was worth only $250,000 and that his wife was the sole beneficiary.
Prosecutors had charged Kang with 30 felonies, but most of those charges were dropped as part of the plea agreement.
The charges included allegations that Kang stole money from overseas clients he had promised to help get into the EB-5 visa program, which requires applicants to invest $500,000 in a company that will use it to create or retain jobs in the United States.
Kang is scheduled to return to court March 28 for a hearing to determine the amount of restitution he will be ordered to pay his victims, the news release said.
“Professionals, including attorneys, who use their position of trust to create elaborate schemes that have no purpose other than to mislead others … will be prosecuted to the full extent of the law,” Acting Special Agent in Charge Anthony Orlando of IRS Criminal Investigation said in a statement. “Today’s sentence reinforces our commitment to every American taxpayer to identify and prosecute those who devise illegal investment schemes designed to promote their own wealth and evade their tax obligations.”