April 12, 2010

FOUR SAN FRANCISCO MEN PLEAD GUILTY TO BANK FRAUD CONSPIRACY CHARGES IN $1.3 MILLION BANK “BUST OUT” SCHEME

SAN FRANCISCO - Three San Francisco men, Peter Chan, Kam Seto, and Zhijian Wu, pled guilty yesterday to bank fraud conspiracy charges, admitting to participating in a bank “bust out” scheme that defrauded banks of a total of more than $1.3 million, United States Attorney Joseph P. Russoniello announced. A fourth conspirator, Kent Wu, pled guilty on March 24, 2010, to a charge arising from the same scheme. A fifth defendant, David Chan, remains a fugitive.

Peter Chan, Seto, Zhijian Wu, and Kent Wu all admitted that they would open bank accounts and obtain credit cards in false and fictitious names. The defendants, after keeping the accounts open for months, would then defraud the accounts by depositing fraudulent checks (including credit card “convenience” checks) from some accounts into other accounts, and by then making rapid ATM withdrawals and point-of-sale purchases before the checks were returned unpaid. As a result, the bank accounts would be overdrawn by thousands, and in some cases, tens of thousands of dollars. Similarly, many of the credit card accounts “busted out” by the defendants ended up with unpaid balances of thousands or tens of thousands of dollars.

Peter Chan, Seto, Zhijian Wu and Kent Wu admitted that, as part of this scheme, they also opened post office box accounts in fictitious names and used those addresses on the bank and credit card applications to fraudulently conceal their identities. The defendants admitted that, as part of the scheme, they opened more than 60 bank and credit card accounts. The defendants admitted to defrauding several banks of more than $1.3 million. The scheme began in 2004 and continued until November 2009.

In addition to pleading guilty to the charge of Conspiracy to Commit Bank Fraud, Seto also pleaded guilty to an Aggravated Identity Theft charge. In pleading guilty, Seto admitted to using the identity information of one of his employees to establish one the fraudulent accounts at issue in the case.

Peter Chan, Seto and Zhijian Wu were indicted by a federal grand jury on Aug. 13, 2009, in a 23-count criminal indictment charging each with Conspiracy to Commit Bank Fraud, Bank Fraud and Aggravated Identity Theft. Kent Wu was indicted by a federal grand jury on Dec. 8, 2009, in a 12-count Superseding Indictment charging him with Conspiracy to Commit Bank Fraud, Bank Fraud, and Fraudulent Use of Unauthorized Access Devices. Both indictments contained forfeiture allegations against the defendants.

The sentencing for Kent Wu is scheduled for June 9, 2010. The sentencing of Peter Chan is scheduled for June 23, 2010. The sentencing of Kam Seto is scheduled for July 7, 2010, and the sentencing of Zhijian Wu is scheduled for July 14, 2010. All of the sentencing hearings will be held before U.S. District Court Judge Maxine M. Chesney in San Francisco.

The maximum statutory penalty for Conspiracy to Commit Bank Fraud is 30 years’ imprisonment and a fine of $1,000,000 or twice the gross gain or loss from the offense, plus restitution. The penalty for a conviction for Aggravated Identity Theft is a 24-month sentence to be served consecutively to any other sentence imposed in the case. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Katherine Dowling, Special Assistant U.S. Attorney David Ward, and Assistant U.S. Attorney Kyle Waldinger are prosecuting the cases with the assistance of legal assistants Rawaty Yim, Rosario Calderon, and Elizabeth Garcia. The prosecution is the result of a four-year investigation by the United States Secret Service.

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