Federal Way, Washington woman indicted for bank and wire fraud for fake investment scheme

Seattle – A 52-year-old Federal Way, Washington woman was indicted this week by a federal grand jury for three counts of wire fraud and two counts of bank fraud, announced Acting U.S. Attorney Teal Luthy Miller. Jenni Yoon Jeong Lee allegedly held herself out to elderly members of the Korean community as an investment advisor. In reality, the investments went into accounts controlled by Lee and were used for her personal expenses. Lee allegedly defrauded at least 28 victims of over $3 million that was used for her expenses, her family’s expenses or to pay off earlier investors in the style of a Ponzi scheme.

“Ms. Lee held herself out as an experienced investment advisor offering her victims a guaranteed return on the funds they placed with her,” said Acting U.S. Attorney Miller. “However, the indictment notes that none of the money was invested and in fact, nearly $1 million of investor funds were accessed and spent at area casinos.”

According to the indictment, Lee created various business entities with names that made it seem they were financial investment companies. Lee opened and controlled bank accounts for these shell companies.

Lee held herself out as a financial advisor employed at the shell companies. She claimed both orally and in writing that she would place victim investments in funds that would guarantee a safe return, sometimes as high as 10%.  She often represented that the principal was fully guaranteed so there was no risk associated with the investment.

Lee allegedly got the victims to write checks to one of the shell companies for ‘investment,’ or she induced the client to fund a self-directed IRA at a legitimate financial services company and give Lee access to manage the account. Lee would sometimes provide the financial services company with a promissory note to make it appear the client was loaning money to one of Lee’s shell companies. In this way she gained control of the investor funds.

In all Lee took in at least $3 million. Some money was paid back to investors making the full loss amount approximately $2.2 million. Of that, over $900,000 was withdrawn and spent at casinos.

The three counts of wire fraud are for specific transfers of funds from self-directed IRA accounts. The two counts of bank fraud are for depositing client checks into one of the shell corporation accounts. These counts are representative acts of the alleged scheme.

The charges in the indictment are punishable by up to 30 years in prison.

The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case is being investigated by the FBI. The case is being prosecuted by Assistant United States Attorney Sean H. Waite