Former San Diego Police Officer and Others Plead Guilty to Crimes Stemming from Operation of Illicit Massage Businesses
SAN DIEGO – James Yiu Lee, a resident of La Jolla, was sentenced today to 78 months in prison for fraud arising from the loss of clients’ funds through on-line trading.
Lee solicited clients through a string of false representations, including that he was a wealthy attorney with numerous graduate degrees who had significant trading experience. Among other things, Lee failed to disclose that he had previously been convicted of defrauding investors. As part of his sentence, U.S. District Court Judge Roger T. Benitez ordered Lee to repay over $10.5 million in losses to his former clients.
Lee pleaded guilty to obstructing justice in October 2014, at which time he admitted to hiding clients’ funds in shell corporation accounts and using a series of elaborate transactions to avoid having to pay restitution he owed the United States from his previous felony conviction. Lee was previously convicted of defrauding investors and embezzling from their pension funds in December 1997 in U.S. District Court for the Northern District of California. For the prior offense, Lee was sentenced to 30 months in custody and ordered to pay $2.88 million in restitution. After his release from custody, Lee began a new scheme in San Diego by creating corporations in the names of other persons in order to prevent the United States from finding and collecting his assets. To date, Lee has paid less than $30,000 of the previously-ordered restitution.
By 2009, Lee actively sought clients’ funds for on-line trading by falsely claiming he was a CPA who had Ph.D., J.D., and M.B.A. degrees. Lee also lied about his professional trading experience and his ability to cover potential losses -- assuring clients he could and would cover 50% of any realized losses. In exchange, Lee instructed clients to send management fees and 50% of realized profits to bank accounts opened in the name of his shell corporations, including San Diego-based ELX Int., Inc. (“ELX”), which intentionally failed to list Lee as a corporate officer or on its bank account. Once the assets were under his control, Lee transferred them to other shell accounts under his control and spent hundreds of thousands of dollars on personal expenses, including lavish international trips and credit card bills for high-end department stores.
By January 2011, Lee’s trading activity created significant realized losses for his various clients. Rather than pay clients for 50% of the losses as promised, Lee restructured billing invoices to disguise the losses. To compound the lies, he then fraudulently billed his clients for non-existent gains. Several victims reported losing retirement funds and life savings as a consequence of accepting Lee’s misrepresentations.
United States Attorney Laura Duffy said, “Although the significant custodial sentenced imposed on the defendant for his brazen and calculated crime may be of little compensation to his victims who lost millions, he will be unable to continue his fraudulent scheme to the detriment of others. It is unfortunate that Mr. Lee did not learn his lesson after his first fraud conviction. He will now have a significant period to reflect on the victims whose savings hard-earned money he squandered.”
|James Yiu Lee||Age: 59|
|SUMMARY OF CHARGES||Case Number: 14CR2937-BEN|
|Obstruction of Justice, in violation of Title 18, United States Code, Section 1503 |
Maximum penalty: 10 years of custody; $250,000 Fine
|James Yiu Lee||Age: 59|
|SUMMARY OF PREVIOUS CHARGES||Case Number: 95CROO41-MMC-1 (NDCA)|
|Wire Fraud (18 U.S.C. § 1343) & Pension Embezzlement (18 U.S.C. § 664)|
Federal Bureau of Investigation