The U. S. Securities and Exchange Commission (SEC) recently filed charges against Jenni Yoon Jeong Lee, a former Seattle-area investment adviser, and her shell company, Evergreen Property Developments LLC, with a years-long fraud scheme targeting elderly members of the Korean-American community.
The SEC’s complaint, filed in the U.S. District Court for the Western District of Washington, charges Lee and Evergreen with violating certain anti-fraud provisions of the federal securities laws, namely: Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and (2) of the Investment Advisers Act of 1940.
The complaint alleges that through Evergreen and other sham entities Lee controlled, using her family relationships and affiliation as a member of the Korean-American community, Lee gained her victims’ trust to solicit approximately $2.7 million from more than 33 investors.
According to the SEC’s allegations, Lee engaged in fraudulent conduct in two ways. First, she falsely held herself out as an investment professional, adviser, and fiduciary with extensive experience in the financial services industry. At times during the fraudulent scheme, she was employed as a contractor for an affiliate of a registered investment adviser; however, Lee was not authorized to offer advice regarding securities investments on behalf of the registered firm or its affiliate. She misrepresented to her clients that she would invest their money through, or in, legitimate companies capable of providing investment returns.
Second, she recommended that some of her clients fund self-directed individual retirement accounts (“SDIRAs”) and obtained access to those SDIRAs through false or deceptive means, such as naming herself as an interested party, or listing her email address on account applications.
Instead of making genuine investments on her clients’ behalf, the SEC alleges that Lee violated her fiduciary duties by investing her clients’ funds with or in Evergreen or other entities she controlled and masking the reality that the entities had no genuine business operations and lacked any capacity to generate returns on the investor funds raised. She also used her clients’ SDIRA funds, often without her clients’ knowledge or consent, to purchase direct investments in Evergreen and her other entities in the form of unsecured promissory notes that she offered and sold. These promissory notes included promises to make yearly interest payments ranging from 1% to 7% and to return investors’ principal upon maturity. Instead, as the SEC further alleges, Lee used all the funds she raised to either make Ponzi-like payments to earlier clients, or to pay for her personal expenses, which included supporting her gambling habit.
The SEC seeks permanent injunctions, including conduct-based injunctions against Lee, disgorgement, prejudgment interest, civil penalties and such other relief as the Court may deem appropriate.
Protecting Your Rights with an Experienced SEC Investment Fraud Attorney
SEC investigation attorney David Chase, Esq. of the Law Firm of David R. Chase, has represented investment advisors in SEC investigations around the country for more than twenty-five years after having held the position of Senior Counsel in the Enforcement Division of the SEC. If you are under SEC investigation and are looking for strategic advice from an experienced SEC enforcement defense attorney, contact David at: 800-760-0912 or e-mail him at: david@davidchaselaw.com. Visit the Firm’s website for the firm’s prior successful results at: www.securitiesfrauddefense.net.
