Colorado Man Pleads Guilty to “Bust Out” Bank Fraud Scheme in Sacramento Area and Elsewhere
SACRAMENTO, Calif. — Jeffrey Kim, 51, of Colorado, pleaded guilty today to bank fraud and aggravated identity theft, U.S. Attorney Phillip A. Talbert announced.
According to court documents, between Feb. 1, 2017, and July 24, 2017, Kim participated in a nationwide check kiting “bust out” scheme in order to obtain cash from banks. The scheme’s participants obtained a real Republic of Korea passport that was altered to bear a new photograph and name, which they used to open bank accounts with a small amount of cash. The accounts were dormant until a time the participants believed the bank would allow the account holder to deposit a check and make withdrawals before the check actually cleared. At that time, the participants wrote checks from a different bank account with non-sufficient funds, deposited those checks into the dormant account, and then withdrew cash from the dormant account before the checks cleared. The participants would access funds by purchasing a money order and then deposit the money order into yet another bank account associated with the scheme.
As part of the scheme, on Feb. 16, 2017, a participant opened an account at a BMO Harris branch in Arizona using a falsified Korean passport. Thirty-six checks were written against the account, all of which eventually bounced for insufficient funds. Another participant opened a Wells Fargo checking account in Arizona, using a different falsified Korean passport. Kim participated in the bust-out of this account. Seven times on May 25-26, 2017, Kim deposited checks from the BMO Harris account into the Wells Fargo at branch locations in Orangevale, Roseville, and Sacramento. Kim then made cash withdrawals of between $800 and $1,900, or requested cash back when depositing the checks.
In addition, on May 26, 2017, Kim purchased a postal money order for $995 from the Carmichael post office, using a debit card connected to one of the Wells Fargo bust-out accounts. Three days later, another participant deposited the money order into a different Wells Fargo account. The funds from the money order were used to give the bank account the appearance of legitimacy until that account was eventually “busted out” as part of the scheme.
On May 24, 2017, Kim obtained a fraudulent Korean passport with Kim’s picture, but the name and Social Security card of another individual, which he used to open a private mail box in Granite Bay and a bank account at the El Dorado Savings Bank in Folsom. Out of the El Dorado Savings Bank checking account, approximately 67 checks were presented for payment in amounts between $992 and $2,998 for a total of $313,796. All of the checks bounced as there was only $100 in the account to cover the checks.
Kim’s bust-out activity resulted in an actual loss of $196,058 to the banks, and an intended loss of $380,429 based on unsuccessful bust-out attempts.
Kim is the second defendant to plead guilty in this case. Kyung Min Kong pleaded guilty on Feb. 10, 2022, and is scheduled to be sentenced on Aug. 25, 2022. Charges are pending against Ki Jang, Il Chung, Hee Soung Oh, Bon Soke Hong, and Jong Eun Lee, who were all indicted on Oct. 21, 2021. The charges against them are only allegations; they are presumed innocent until and unless proven guilty beyond a reasonable doubt.
This case is the product of an investigation by the IRS Criminal Investigation and the Federal Bureau of Investigation. Assistant U.S. Attorney Audrey B. Hemesath is prosecuting the case.
Kim is scheduled to be sentenced by U.S. District Judge Troy L. Nunley on Oct. 6, 2022. Kim faces a statutory maximum penalty of 30 years in prison and a fine of up to $1 million for bank fraud and a mandatory consecutive two years in prison and a fine of up to $250,000 for aggravated identity theft. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.