Wholesale Executive Pleads Guilty for Role in $9 Million Pasadena Bank Fraud Scheme

A California man who was vice president of a wholesale equipment company pleaded to fraud charges Wednesday in connection with a bank fraud scheme that resulted in more than $9 million in losses to a Pasadena bank based.

FBI agents arrested Chung Yu “Louis” Yeung on February 24, 2015 after he was indicted on October 22, 2014.

On Wednesday, Yeung, 39, a resident of San Dimas, pleaded guilty before U.S. District Judge Christina A. Snyder of the Central District of California to one count of conspiracy to commit bank fraud and four counts of bank fraud against East West Bank. Sentencing was set for June 20, 2016, before Judge Snyder.

East West Bank’s corporate headquarters are at 135 N. Los Robles Avenue in Pasadena.

According to admissions made in connection with his guilty plea, from 2007 to 2012, Yeung was the vice president of Eastern Tools and Equipment Inc., a wholesale equipment company in Ontario, California, that sold portable generators to retailers across the country. Yeung admitted that beginning in 2007, he and his co-conspirators defrauded East West Bank in connection with a line of credit for Eastern Tools by making and causing to be made material misrepresentations to the bank about Eastern Tools’ accounts receivable and its financial statements.

The conspirators created numerous shell corporations to act as purported suppliers and retailers doing business with Eastern Tools, when, in reality, these shell corporations were entirely under the control of Yeung and existed for the sole purpose of creating the illusion of such business, he admitted.

Yeung admitted that the fictitious companies allowed him and other conspirators to falsely inflate Eastern Tools’ accounts receivable and financial statements in representations to East West Bank.

To further the scheme, Yeung and other conspirators opened and caused to be opened post office boxes, phone accounts and email accounts purportedly associated with the shell retail companies, and provided information about these items to East West Bank auditors to promote the illusion that these shell customers were independent entities, according to admissions made in connection with Yeung’s plea.

Eastern Tools defaulted on the promissory note after East West Bank discovered the fraud, causing more than $9 million in losses to the bank, Yeung admitted.

SIGTARP, IRS-CI and the FBI investigated the case. Senior Litigation Counsel David A. Bybee of the Criminal Division’s Fraud Section is prosecuting the case.