Local Orange County Federal Wire Fraud Prosecution
As an overview, wire fraud is a scheme designed to deprive an individual of their property, usually money, by using lies or false pretenses. According to 18 U.S.C. 1343, wire fraud encompasses fraudulent schemes that are perpetuated using electronic communication. This includes the internet, radio, and television. Individuals who violate the federal wire fraud statute face up to twenty years in federal prison and/or exorbitant fines.
Fraudulent schemes are crafted to trick unsuspecting individuals into turning over access to their property or relinquishing their ownership rights based on false promises or outright lies. Common examples of federal wire fraud include pyramid schemes, bribes, kickbacks, and money laundering.
To prove wire fraud, the U.S. Attorney's Office must prove beyond a reasonable doubt that someone:
- Intended to defraud;
- Designed or perpetuated a scheme to defraud; and
- Used "wire communication" to advertise this scheme or communicate with victims.
Federal wire fraud is a fairly common charge in the state of California. Though there is a state statute prohibiting wire fraud, the Federal Bureau of Investigation (FBI), Internal Revenue Service (IRS), U.S. Attorney's Office, and other federal agencies commonly team up to prosecute individuals suspected of committing wire fraud in Southern California. These cases are filed in federal district court and face much stricter sentences than state fraud crimes.
In Orange County, attorney Stephen Young Kang was arrested by the FBI and IRS on August 10, 2015 at LAX when he tried to flee the country for South Korea. Kang represented food distribution business Ottogi America Inc. in a variety of real estate business transactions. Between 2012 and 2014, the company wired approximately $3.7 million in company funds to a private trust that was set up to purchase land and buildings near Gardena, California. Kang was placed in charge of the trust, tasked with using the funds to invest in these properties. However, instead, Kang decided to keep the money for himself and arranged an elaborate scheme to defraud Ottogi of its money. Kang set up multiple personal accounts and transferred the $3.7 million to himself, using the money to buy luxury items, pay for business expenses, and send money to other unrelated victims of his wire fraud scheme.
As part of his practice in Orange County, Texas, and South Korea, Kang routinely defrauded his clients. For example, in order to obtain an EB-5 visa as a foreign-born immigrant, you must invest a minimum of $500,000 in a business that creates at least ten jobs in the U.S. A married couple from South Korea entered into an agreement with Kang in which he offered to assist them with both investing and applying for their EB-5 visas. Over $1 million was wired to Kang, yet he never invested their money. Instead, he again spent the money on lavish purchases, business ventures, and paying back other victimized clients. Kang's scheme was to take money from a new client and use part of that money to make partial payments to old clients that had used him for investing. This kept clients in the dark about the fraudulent plan.
The FBI and IRS charged Kang with 25 counts of federal wire fraud and money laundering, and more counts may be added as new victims appear. Kang faces up to 500 years in federal prison for the 20 federal wire fraud charges and 5 money laundering charges.
If you are being investigated for federal wire fraud or are already facing charges, contact Scott D. Hughes, Attorney at Law, for a free consultation. Scott D. Hughes is an Orange County, California criminal defense lawyer who specializes in litigating federal wire fraud accusations. To schedule an appointment at our Newport Beach office, call Scott D. Hughes, Attorney at Law at (714) 423-6928.