San Gabriel Valley Wholesale Executive Pleads Guilty for Role in $9 Million Bank Fraud Scheme
LOS ANGELES – A San Dimas man who was a vice president of an Ontario-based wholesale equipment company pleaded guilty today to federal charges in connection with a bank fraud scheme that resulted in more than $9 million in losses to a California bank.
Chung Yu Yeung (also known as Louis Yeung), 39, pleaded guilty before United States District Judge Christina A. Snyder to one count of conspiracy to commit bank fraud and four counts of bank fraud. Sentencing was set for June 20 before Judge Snyder.
Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Eileen M. Decker, Acting Special Agent in Charge Anthony Orlando of IRS Criminal Investigation’s Los Angeles Field Office, Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Christy Goldsmith Romero and Assistant Director in Charge David Bowdich of the FBI’s Los Angeles Field Office made the announcement.
According to admissions made in connection with his guilty plea, from 2007 to 2012, Yeung was the vice president of Eastern Tools and Equipment Inc. (Eastern Tools), a wholesale equipment company based in Ontario, California, that sold portable generators to retailers across the country. Yeung admitted that beginning in 2007, he and his co-conspirators defrauded the Pasadena-based East West Bank in connection with a line of credit for Eastern Tools by making and causing to be made material misrepresentations to the bank about Eastern Tools’ accounts receivable and its financial statements. 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 admitted that the fictitious companies allowed him and other conspirators to falsely inflate Eastern Tools’ accounts receivable and financial statements in representations to East West Bank.
To further the scheme, Yeung and other conspirators opened and caused to be opened post office boxes, phone accounts and email accounts purportedly associated with the shell retail companies, and provided information about these items to East West Bank auditors to promote the illusion that these shell customers were independent entities, according to admissions made in connection with the plea agreement.
Eastern Tools defaulted on the promissory note after East West Bank discovered the fraud, causing more than $9 million in losses to the bank, according to Yeung’s admissions.
“This defendant went to great lengths to create the illusion of business that defrauded the victim bank out of millions, but law enforcement was able to penetrate the illusion,” said United States Attorney Eileen M. Decker. “Crimes like these can threaten the stability of our financial institutions and therefore our national economy.”
SIGTARP, IRS Criminal Investigation and the FBI investigated the case. Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section is prosecuting the case.