Former Vice President of Inland Empire Tool Company Sentenced to 63 Months in Prison for Role in $9 Million Bank Fraud Scheme
LOS ANGELES – The former vice president of an Ontario-based wholesale tool company was sentenced today to 63 months in federal prison for his role in a scheme to defraud East West Bank that resulted in more than $9 million in losses.
Chung Yu Yeung (also known as Louis Yeung), 39, of San Dimas, was sentenced this afternoon by United States District Judge Christina A. Snyder. In addition to the prison term, Judge Snyder ordered Yeung to pay $9,618,908 in restitution and to forfeit a property in San Dimas that was purchased with proceeds of the scheme.
The sentencing of Yeung was announced today by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, United States Attorney Eileen M. Decker, Assistant Director in Charge Deidre Fike of the FBI’s Los Angeles Division, Acting Special Agent in Charge Anthony J. Orlando of Internal Revenue Service-Criminal Investigation’s (IRS-CI) Los Angeles Field Office and Special Inspector General Christy Goldsmith Romero of the Troubled Asset Relief Program (SIGTARP).
Yeung pleaded guilty on March 30 to one count of conspiracy to commit bank fraud and four counts of bank fraud. Yeung, a former vice president of Eastern Tools and Equipment, Inc. (Eastern Tools), admitted that he and his co-conspirators defrauded East West Bank by making material misrepresentations about Eastern Tools’ accounts receivable and its financial statements to obtain and maintain a loan with the bank. The conspirators created numerous shell corporations to act as purported suppliers and retailers doing business with Eastern Tools, when, in reality, these shell corporations were entirely under the control of Yeung and existed for the sole purpose of creating the illusion of such business, he admitted. Yeung also admitted that the fictitious companies allowed Yeung and other conspirators to falsely inflate Eastern Tools’ accounts receivable and financial statements in representations to East West Bank.
Yeung admitted that in order to further the scheme, he and others opened post office boxes, phone accounts and email accounts purportedly associated with the shell retail companies, and provided information about them to East West Bank auditors, to promote the illusion that these shell customers were independent entities.
Eastern Tools defaulted on the loan after East West Bank discovered the fraud, causing more than $9 million in losses to the bank.
“Yeung created companies and profits that were nothing but illusions, tricking a bank into loaning him millions of dollars,” said United States Attorney Eileen M. Decker. “This was a sophisticated crime that caused substantial losses, warranting the punishment imposed by the Court today.”
“Today, Yeung was held accountable for his illegal actions involving a massive loan fraud scheme that generated millions of dollars through the use of corporations that existed on paper only,” said Acting Special Agent in Charge Anthony J. Orlando of IRS Criminal Investigation. “The audacity of this scheme was truly astounding and illustrates the lengths to which fraudsters will go to game the financial system for personal gain. IRS Criminal Investigation is proud to work with our law enforcement partners by lending our financial expertise in these complex investigations.”
Yeung’s co-defendant, Guo Xiang Fan, who was the owner and president of Eastern Tools, is a fugitive.
The FBI, IRS-CI and SIGTARP investigated the case. Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section prosecuted the case.