Convicted Businessman Pleads Guilty to Obstructing Justice
SAN DIEGO, CA—James Yiu Lee pled guilty earlier today to obstructing justice in relation to a fraud scheme that resulted in investor’s losing more than $10 million. In his guilty plea, Lee also admitted hiding stolen funds in shell corporation accounts and using a series of elaborate transactions to avoid having to pay restitution he owed the United States from a previous felony conviction.
In December 1997, Lee (who was a part-time resident of La Jolla) was convicted of defrauding investors and embezzling from their pension funds. In November 1998, he was sentenced to 30 months in custody and ordered to pay $2,880,000 in restitution. To date, Lee has paid less than $30,000 of the owed restitution. According to documents filed in court, Lee began a new scheme in 2007, which he intentionally designed to obstruct the United States from collecting his income to pay the outstanding restitution.
As noted in his plea agreement, by 2009, Lee was soliciting new investors and falsely promising to share 50 percent of all realized gains and losses incurred from his online trading activity. In addition, he attracted clients by falsely informing them that he was a CPA, with Ph.D., J.D., and M.B.A. degrees. Lee also failed to disclose his 1997 felony fraud conviction.
In entering his plea, Lee admitted instructing clients to send management fees and profits from trades to bank accounts he opened in the name of shell corporations, including San Diego-based ELX Int., Inc. (“ELX”), which failed to list Lee as a corporate officer or on its bank account. Lee obtained use of his client’s funds by directing them to send payments to the ELX bank account. Once the assets were under his control, Lee would then transfer them to other shell accounts under his control. He would then use the hundreds of thousands of dollars of these stolen funds for personal expenses.
By January 2011, Lee admitted that his trading activity created significant realized losses to client accounts. Rather than pay clients for 50 percent of the losses, as promised, Lee restructured billing invoices to disguise the losses. He then proceeded to falsely bill his clients for non-existent gains. In total, Lee’s trading activity led to over $10 million in losses for over 14 clients.
Lee entered his guilty plea before Magistrate Judge Barbara L. Major. U.S. District Court Judge Roger T. Benitez will sentence Lee on January 19, 2015.
Case Number: 14CR2937-BEN James Yiu Lee Age: 59
SUMMARY OF CHARGE
Title 18, United States Code, Section 1503 (Obstruction of Justice) Maximum penalty: 10 years of custody; $250,000 Fine
SUMMARY OF PREVIOUS CHARGE
Case Number: 95CROO41-MMC-1 (NDCA) Wire Fraud (18 U.S.C. § 1343) & Pension Embezzlement (18 U.S.C. § 664)
AGENCY Federal Bureau of Investigation