Bellevue, Washington residents Sung Hong, also known as Lawrence or Laurence Hong, and Hyun Joo Hong, also known as Grace Hong, along with their company Pishon Holding LLC, are facing charges of fraudulently soliciting and defrauding customers out of more than $11 million, the Commodity Futures Trading Commission (CFTC) announced June 8, 2017.
On June 1, 2017, Judge James Robart of the U.S. District Court for the Western District of Washington issued a Statutory Restraining Order (SRO) against the Defendants, freezing their assets and granting the CFTC access to their business records. Laurence Hong and Grace Hong were arrested by the Federal Bureau of Investigation, Seattle Division, on related criminal charges June 2, 2017, with the U.S. Attorney’s office for the Western District of Washington leading the criminal prosecution.
The CFTC complaint details how the Hongs allegedly targeted individuals at a church gathering, a subsequent YouTube video of the event, and through direct solicitations. A pastor at the church reportedly made claims regarding Laurence Hong’s trading success and assets under management, based on information provided by the Hongs, which they did not correct even after hearing the statements.
The complaint further alleges the Defendants made several false statements in written solicitation materials. These included claims that Pishon Holding LLC only charged performance fees on profitable accounts, that the fund offered a 50% “risk free rate of return,” and that Grace Hong held valid Series 65 securities licenses – all of which the CFTC alleges were untrue. Specifically, the complaint states the Defendants paid themselves fees regardless of customer account profitability.
Notably, the CFTC also alleges Laurence Hong failed to disclose a prior felony conviction for soliciting and misappropriating investment funds, including from members of a Bellevue church. James McDonald, Director of the CFTC’s Division of Enforcement, emphasized the cooperative nature of the investigation, highlighting the combined efforts of the CFTC and the U.S. Attorney’s office to pursue justice and restitution for defrauded customers.
Source: CFTC.gov
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