Couple at helm of Irvine firm arrested in $8-million Ponzi scheme targeting Korean Americans
Federal agents have arrested a couple that ran an Irvine investment firm, saying they were the architects of a Ponzi scheme that cheated some 60 Korean American investors out of $8 million.
Euirang Hwang, 36, chairman of Pinupitu Inc., and his girlfriend, Sang Yi, 39, were arrested at a Corona house at 6:50 a.m. Tuesday on federal wire fraud charges.
The duo orchestrated a Ponzi scheme that targeted 60 Korean American investors throughout California, promising them annual returns of between 24% and 45%, according to the Feb. 3 four-count federal grand jury indictment.
A Santa Ana judge Tuesday ordered Hwang and Yi held without bail.Hwang allegedly solicited business from the Korean American community from 2006 to 2009, recruiting trusted business people and church leaders and presenting himself as a billionaire with holdings in 60 real estate and computer and office equipment companies in Korea, Japan and China. He told them he generated income by buying up small companies and selling them for profit.
Hwang founded the company and operated its Irvine offices, which at one point claimed 20 employees, and Yi, a South Korean citizen, allegedly controlled its finances as president and secretary.
“They were doing it in large part just to have the aura about them of being successful,” said Assistant U.S. Atty. Joseph McNally. “A lot of the money was used to put on this front of having a legitimate business.”
Yi’s attorney and Hwang's public defender did not immediately return calls for comment.
It took agents several weeks to track down the Harbor City couple, who had moved to an acquaintance’s house since the FBI investigation began in April.
Pinupitu Inc. has had a troubled existence for the last several years, including unpaid taxes and several lawsuits alleging a scheme, the Orange County Register reported last year.
In July 2009, the state Department of Corporations ordered the firm to stop selling securities, saying Vice President Jin Sung Kim was not a registered stockbroker and had misrepresented the company’s financial data, including profits, losses and the risks of investment.
The firm closed shop sometime last year, authorities said.
Each count of wire fraud carries a maximum penalty of 20 years in federal prison.
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