SAN FRANCISCO — A federal grand jury has indicted an Alamo man in a $39 million Ponzi scheme that involved more than 100 victims, authorities said.
The indictment alleges that Derek Chu, 41, used several companies to raise the money by fraudulently soliciting investments in the purchase and resale of pro basketball tickets and luxury suites, according to a statement from U.S. Attorney Ismail Ramsey of the Northern District of California. The tickets and suites were to the Oracle Arena in Oakland, the Chase Center in San Francisco and Staples Center in Los Angeles.
Chu is charged with eight counts of wire fraud and three counts of money laundering, Ramsey said. Authorities arrested him Tuesday. He is next scheduled to be in court on May 10.
Chu got investors to hand over their money by making numerous false statements to them, including how their investment funds would be used, how investors would be repaid and whether the investments were secured by collateral, Ramsey said.
The indictment alleges that Chu mixed the investors’ money between his own personal back accounts and his companies’ accounts, Ramsey said. That resulted in investor money being used to repay earlier investors, as well as other unpaid expenses, he said. More than $7.3 million of the investor funds were used for Chu’s own personal benefit; he used it to pay credit card debts, travel, purchase luxury vehicles and jewelry and to pay utility bills, Ramsey said.
Each of the wire-fraud counts carries a maximum sentence of 20 years in prison and a fine of $250,000, while each of the money-laundering counts could bring the same fine and a maximum sentence of 10 years in prison, authorities said.
Source: www.mercurynews.com