San Francisco, CA – June 9, 2009 – Peter Son, CEO of SNC Asset Management, and Jin K. Chung, the company’s CFO, are facing charges of operating an $85 million foreign currency (forex) scam targeting approximately 500 customers, according to a complaint filed by the U.S. Commodity Futures Trading Commission (CFTC) in federal court in San Francisco.
The CFTC alleges that Son and Chung, along with SNC Asset Management, Inc. and SNC Investments, Inc., both of Pleasanton, California, misappropriated customer funds to pay off earlier investors and cover personal and business expenses. The complaint details charges of fraudulent solicitation and the issuance of false statements designed to conceal the lack of legitimate trading activity.
A federal court has issued an emergency restraining order freezing the defendants’ assets and preserving records. A hearing on the CFTC’s motion for a preliminary injunction is scheduled for June 22nd.
According to the CFTC, the scheme primarily targeted members of the Korean community in the San Francisco Bay area since at least 2000. Son and Chung allegedly falsely claimed to be successful forex traders, promising annual returns of 50 percent and guaranteeing monthly returns of 2 to 3 percent. They presented SNC as a leading firm in the industry.
The defendants reportedly took in approximately $22 million in new funds in the year leading up to the company’s abrupt closure, with millions arriving shortly before operations ceased. The CFTC claims that little actual trading occurred and what trading *did* take place was unprofitable. Instead, funds were allegedly used to pay existing customers, cover personal expenses – including mortgage payments on Son’s home – and funnel money to a relief defendant.
SNC Investments, a registered Futures Commission Merchant, is also charged with violating minimum net capital requirements and failing to report its undercapitalization. Ann Lee, the wife of Peter Son, has been named as a relief defendant, accused of receiving monthly payments as wages despite not performing any services for the company.
The CFTC is seeking restitution, disgorgement of profits, civil monetary penalties, and permanent injunctions against further violations of federal commodities laws. Son appeared in federal court in Oakland, California yesterday on separate federal criminal charges related to the alleged scheme.
Stephen J. Obie, Acting Director of the CFTC’s Division of Enforcement, emphasized the predatory nature of the scheme, stating it exploited personal relationships within an affinity group to defraud investors of their savings.
Source: CFTC.gov
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