Guilty to $1 Million Investment Fraud Scheme

Scheme Used the Names of Prominent Politicians to Lure Investors

SANTA ANA – The second of two defendants has pled guilty in federal district court, admitting that he defrauded several victims by falsely claiming that invested funds would be used to sponsor political visits to China by prominent politicians.

Defendant Jack Hu, 27, of Irvine, pleaded guilty before the Honorable David O. Carter, United States District Judge, to one count charging him with subscribing to a false income tax return and one count of wire fraud.

According to the plea agreement, Hu and co-defendant Kuei Fuang Tsuei Hu, 63, told victims that their funds would be invested in Jack Hu’s company, London International Group, and that the money would be used to sponsor visits to China by former Presidents Bill Clinton and George W. Bush to make speeches. The defendant told at least one victim that he would use the money from tickets sold to the Presidents’ speeches to pay monthly interest of 10%.

Hu failed to disclose to investors that a significant portion of the invested funds was being diverted for the defendant’s personal use, including funding significant amounts of gambling activity at major Las Vegas casinos, according to the plea agreement.

With respect to the tax fraud violation, Hu failed to report income he received of $1,050,000 on his 2007 income tax return which represented investor funds he received and used to fund gambling activities.

With respect to the wire fraud violation, a victim wire transferred $200,000 to a London International Group bank account controlled by Hu which was mostly used to fund gambling activities.

Both defendants, Jack Hu and Kuei Fuang Tsuei Hu, have been held without bond since their arrests in October of 2011.

When Hu is sentenced by Judge Carter on January 7, 2013 the statutory maximum sentence he will receive for the two offenses to which he is pleading guilty is 23 years imprisonment, and a fine of at least $500,000. In addition, the Court may order restitution to the victims for any losses suffered of at least $1,000,000.

Co-defendant Tsuei pleaded guilty on July 11, 2012 to one count of wire fraud and will be sentenced on September 17, 2012.

The investigation was conducted by special agents of the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation, in conjunction with the United States Attorney’s Office in Santa Ana.