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Director of South Korea’s Earthquake Research Center Convicted in L.A. of Money Laundering Stemming from Million Dollar Bribe Scheme

Posted by Fay Arfa | Jul 19, 2017 | 0 Comments

LOS ANGELES – A former director of South Korea's Earthquake Research Center at the Korea Institute of Geoscience and Mineral Resources (KIGAM) has been found guilty of using a Southern California bank account to launder bribes he received from two seismological companies, including one based in Pasadena.

Heon-Cheol Chi, 59, of South Korea, was convicted late yesterday of one count of transacting in criminally derived property, an offense that carries a statutory maximum sentence of 10 years in federal prison.

Chi was convicted of the money laundering charge following a four-day jury trial in United States District Court. The jury that issued the guilty verdict was unable to reach a unanimous decision on five other money laundering charges.

According to the evidence presented at trial, Chi laundered funds that were the proceeds of bribes he accepted in violation of South Korea law.

“The American financial system is not to be used as a storehouse for the proceeds of corrupt activity,” said Acting United States Attorney Sandra R. Brown. “This defendant used a bank account here in Southern California to conceal over one million dollars in bribe money obtained through the abuse of his public position. This conviction sends a message that should be heard around the world.”

“Defendant Chi exploited the U.S. banking system to enrich himself and to conceal his corrupt practices,” said Assistant Director in Charge Deirdre Fike of the FBI's Los Angeles Field Office. “The FBI and our partners will continue to hold accountable international offenders who gain the advantage on the global playing field by breaking U.S. law.”

From at least 2009 through 2015, Chi abused his official position at KIGAM to demand and receive over $1 million in bribes from two seismological companies in exchange for providing them with unfair business advantages in the South Korean seismological market. The trial evidence showed that Chi advocated the purchase and use of equipment from these two companies by KIGAM and other South Korean customers. He also provided these companies with market intelligence and inside information, including confidential information about their competitors and the KIGAM bidding process.

The evidence showed that Chi directed that his bribe payments be paid in cash or wired to his personal account at a Bank of America branch in Glendora. From that account, Chi transferred approximately half of those bribe payments to an investment account he held in New York City, and he spent approximately 70 percent of the remaining funds in South Korea, where he resided and worked.

In addition to his use of cash payments and the U.S. banking system, the trial evidence showed that Chi took a number of steps to conceal his bribery scheme, including instructing representatives of the companies to delete or not respond to his emails, requesting that these company representatives not inform his colleagues at KIGAM of his illegal arrangements with these companies, and by sending fictitious invoices listing a false address in New Jersey. As Chi acknowledged in an email to one of the companies in 2005, “Usually I deleted almost all e-mail or papers related to [payments from these companies] because I am the director of earthquake research center and I am not allowed to be involved in it.”

The evidence at trial included numerous additional emails in which Chi admitted that he was acting illegally. For example, in 2014 Chi wrote to a British company that also paid him bribes: “I am a governmental officer and I should not have any contact with [a] private company. Moreover, it is illegal to assist any company related to the test.”

According to the trial evidence, Chi accepted bribes that exceeded his legitimate income from KIGAM by a substantial margin.

“International corruption undermines the rule of law, threatens our national security, and harms honest companies who are playing by the rules,” said Acting Assistant Attorney General Kenneth Blanco of the Justice Department's Criminal Division. “As this case demonstrates, the Criminal Division will hold responsible the companies and individuals who are paying bribes to foreign government officials, and the foreign government officials themselves. For the second time in recent months, the Criminal Division has convicted a foreign official who solicited bribes and then laundered the illicit proceeds in the United States. We will continue to hold such individuals responsible and accountable.”

Chi is scheduled to be back on court on Thursday to appear before United States District Judge John F. Walter on a motion by prosecutors to have him remanded into custody.

Judge Walter is scheduled to sentence Chi on October 2.

The case against Chi is part of an ongoing investigation by the FBI's International Corruption Squad in Los Angeles. Assistant United States Attorney Poonam Kumar of the Major Frauds Section, and Trial Attorneys David Fuhr and Anna Kaminska of the Criminal Division's Fraud Section, are prosecuting the case.

The Criminal Division's Office of International Affairs provided substantial assistance in this matter.

The Justice Department is grateful to the government of South Korea for providing substantial assistance in gathering evidence during this investigation. The Department also thanks its law enforcement colleagues in the United Kingdom for their assistance in the Department's investigation.

Component(s): USAO – California, Central

Contact: Thom Mrozek Spokesperson/Public Affairs Officer United States Attorney's Office Central District of California (Los Angeles) 213-894-6947

Press Release Number: 17-137 Updated July 18, 2017

Central District of California DOJ / 17-137 / July 18, 2017

About the Author

Fay Arfa

Fay Arfa has the distinction of being Certified as a Specialist in two separate areas of law – Criminal Law as well as Appellate Law – by the California State Bar, Board of Specialization. The National Board of Trial Advocacy has also awarded her a board Certification in Criminal Trial Advocacy. ...


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