Second Key Player in $8 Million Scheme Ponzi Scheme Targeted Korean-Americans

The bookkeeper for an Irvine investment firm pleaded guilty late this afternoon to a federal wire fraud charge and admitted that she helped the owner of the company run a Ponzi scheme that collected more than $8 million from approximately 60 primarily Korean-American victims.

Sang Yi, 40, who until her arrest last year resided in the Harbor City district of Los Angeles, pleaded guilty to the felony fraud charge before United States District Judge James V. Selna.

Yi’s boyfriend, Euirang Hwang, 37, who also resided in Harbor City, recently pleaded guilty in this case. Hwang, who was the founder and chairman of Pinupito Inc., the fraudulent investment company that operated out of offices in Irvine, pleaded guilty to a wire fraud charge in December.

Yi, a South Korean citizen who was the president and secretary of Pinupito, is scheduled to be sentenced by Judge Selna on June 6. Hwang, a naturalized United States citizen, is scheduled to be sentenced on April 4.

According to court documents, Hwang and Yi promised investors high annual returns with false representations that Pinupito generated income by buying smaller companies in Korea, growing them, and selling them for a large profit. Investors were falsely told that Hwang was a billionaire and that his profitable company had extensive holdings in Korean businesses and real estate.

When they pleaded guilty, Hwang and Yi both admitted that they made false representations to investors. The money collected from investors was not used to finance Pinupito’s operations, but rather was used to pay, among other things, luxury car leases, personal expenses, and returns to existing investors, according to court documents.

Hwang and Yi marketed Pinupito to members of the Korean-American community, soliciting some investors during meetings held at Korean-language churches.

As a result of pleading guilty to wire fraud, Hwang and Yi each face a statutory maximum penalty of 20 years in federal prison.

The case against Hwang and Yi is the result of an investigation by the Federal Bureau of Investigation.

Former Bank Executive, Orange County Pleads Guilty to Stealing Nearly $2 Million

An Orange County man who served as a vice president of Farmers and Merchants Bank and was the manager of the institution’s Laguna Hills branch pleaded guilty today to stealing nearly $2 million from a customer’s account.

Matthew J. Walker, 34, of Orange, pleaded guilty this afternoon to one count of theft of bank funds. During this afternoon’s hearing before United States District Judge Andrew J. Guilford, Walker specifically admitted that he stole $1,973,000 over a 16-month period that ended in July 2010.

By pleading guilty, Walker acknowledged that he withdrew money from a line of credit in the name of a trust that held an account at Farmers and Merchants. To cover up the scheme, Walker made interest payments on the money supposedly loaned to the trust.

When he is sentenced on May 21, 2012, Walker will face a statutory maximum sentence of 30 years in federal prison. A plea agreement in the case contemplates a sentence of approximately four years, but Judge Guilford will determine the appropriate sentence in this case.

The Orange County Bail Bonds office stated that if this defendant were to bail out of jail, the bail would be nearly $1 million. That would mean that he would have to come up with $100,000.

The case against Walker was investigated by the FBI.

CONTACT:
Assistant United States Attorney Jennifer Waier (714) 338-3550