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Feds Bust ‘Bustout’ Ring That Stole $15M
LOS ANGELES – A brazen scheme to rip off major financial institutions in Southern California has been busted by authorities, who arrested 12 people and are seeking three others in connection with a ‘bustout’ scam that netted at least $15 million.
The ‘bustout’ scheme, dubbed ‘Operation Check Kkang,’ involved depositing bogus checks and immediately withdrawing funds from the account, leaving the banks to foot the bill when the checks bounced.
The indictment, which was returned by a federal grand jury on May 7 and unsealed this morning, describes a scheme that allegedly started in February 2010 and continued until last October 2013. Those named in the indictment include Jae Ho Chung, 44, of Los Angeles; Michael Yeon Cho, 30, of Pacific Palisades; and Roger Lee, 48, of Cerritos.
According to the indictment, Chung and Cho were ‘processors’ who fabricated or hired others to make fictitious checks for the purpose of conducting bustouts. The bogus checks ranged in amounts from $2,300 to more than $28,000.
Defendants R. Lee, K.Y. Lee, J.G. Kim, and Shim were ‘brokers,’ allegedly soliciting people with legitimate bank accounts who would lend their accounts to be busted-out in exchange for a fee. They allegedly found bank customers by placing advertisements in Korean-language newspapers.
Defendants Chao, Jae, Palafox, An, J.Y. Cho, E.A. Kim, H.R. Lee, H.J. Lee, and Lim were ‘runners’ or ‘washers’ who allegedly deposited fictitious checks into, and then withdrew funds from, the account to be busted-out. Runners and washers used funds from the bustouts to purchase goods, services and gift cards, according to the indictment.
If convicted of the two counts in the indictment, each defendant would face a statutory maximum penalty of 60 years in federal prison. The investigation was jointly conducted by the FBI, IRS – Criminal Investigation, and the Pomona Police Department, with assistance from other agencies.
Key Facts
- State: California
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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