Financial Advisor Sentenced to More Than 11 Years in Prison for Defrauding More Than a Dozen Clients in $8.1 Million Ponzi Scheme
SANTA ANA, California – A former Ameriprise financial advisor who ran a Ponzi scheme that defrauded 20 of her clients – including some of her relatives – out of more than $8.1 million was sentenced today to 136 months in federal prison.
Li Lin Hsu, a.k.a. Yilin Hsu Lee, 42, of Diamond Bar, was sentenced by United States District Judge Andrew J. Guilford, who also ordered her to pay $5,274,277 in restitution to her victims. Hsu pleaded guilty in February 2019 to one count of wire fraud.
Between February 2014 and May 2018, Hsu lured in her victims with the promise that she would safely invest their money. She gained the trust of her victims – nearly all of whom are members of Southern California’s Chinese community – by speaking to them in their native language and telling them she was part of their community. Other victims included Hsu’s relatives.
In reality, Hsu failed to invest any of her victims’ money. Instead, she used their funds to buy homes in Diamond Bar and Irvine, a luxury Tesla automobile, a vacation at the Peninsula Hotel in Paris, and thousands of dollars’ worth of luxury goods at high-end stores such as Harry Winston, Chanel and Hermes. In the hallmark of a Ponzi scheme, Hsu also used money she stole from later investors to make lulling payments to early investors.
Hsu began her scheme while employed at Ameriprise Financial, Inc., as a financial advisor. Ameriprise fired her in 2015 after discovering her misconduct. In 2016, the Financial Industry Regulatory Authority (FINRA) barred Hsu from working in the investment business.
Shortly after Ameriprise terminated her, Hsu founded her own companies – American Capital Trading Group LLC and, in 2016, American Capital Republic, Inc. – where she sought out additional victim investors and swindled them.
Hsu told these new clients that their funds would be invested in low-risk municipal bonds. As with her Ameriprise accounts, Hsu failed to invest the funds as promised, but rather spent the funds on herself. She fabricated account statements that showed her victims’ funds were safely invested and lulled her victims into believing the account statements by making nominal “interest payments” that originated from the funds of other victims. She also lied to one of her victims when she said American Capital Trading Group – which she controlled – was an Ameriprise affiliate.
Through these two companies, Hsu caused losses of $8,191,554 to her victims.
In 2016, Hsu repeatedly lied under oath to the Securities and Exchange Commission, which had begun investigating her. After the FBI arrested Hsu in April 2018 and in violation of a court order, Hsu met with two of her victims and told them to lie to the FBI that her plan had always been to invest in the two properties she had purchased. She also induced them to give her an additional $450,000, which she then used to pay back another victim.
The FBI investigated this matter.
This case was prosecuted by Assistant United States Attorneys Poonam G. Kumar and Alexander C.K. Wyman of the Major Frauds Section, and Katharine Schonbachler and Victor A. Rodgers of the Asset Forfeiture Section.