Arcadia-based company under investigation, councilman’s connections under scrutiny
State and federal agencies are investigating an Arcadia-based company that is facing allegations from investors that it swindled them out of hundreds of thousands of dollars, and may have taken more from individuals overseas.
Officials with the Department of Business Oversight said Tuesday the company was under investigation, but declined to comment further.
The company, US Fine Investment Arts, Inc., has connections to Arcadia Councilman John Wuo, who many Chinese investors say earned their trust in the company because of his position as an elected official.
Over the past year, Wuo has appeared at marketing events for the organization where he’s handed out prizes to top investors, such as oversized novelty keys to Mercedes-Benz’s, and given glowing endorsements of CEO Steve Chen’s new venture GemCoin, which he once called a “breakthrough in finance.”
Wuo’s image has also been printed on thousands of promotional pamphlets alongside CEO Steve Chen and principal Solomon Yang.
GemCoin is a digital currency, similar to Bitcoin, that is purportedly backed by amber and other precious gems mined in the Dominican Republic and Mexico, according to promotional websites.
Wuo claims to have no knowledge of or involvement with GemCoin or USFIA, and when asked about the marketing materials, he said Chen used his image without his consent and he had asked to have it removed.
On Monday, however, Wuo was seen in the lobby of USFIA headquarters, located at 135 E. Live Oak Ave., where he declined to comment on why he was there, saying he hired an attorney who advised him not to speak with the press.
A document filed in December 2013 with the Secretary of State lists Wuo and Chen as business partners in a company called 24 HD Surveillance, LLC. When asked about his involvement in the company, Wuo declined to comment.
WHAT IS USFIA?
USFIA operates under parent company Alliance Financial Group, also owned by Chen, which claims to own $50 billion in assets globally, including mining operations, real estate, jewelry manufacturing, theme parks and electric automobiles, according to Chinese-language websites translated into English.
Investors have described USFIA as a multilevel marketing company, in which members recruit other members to invest and then profit off of investments made in their down line.
Some who have purchased large amounts of GemCoin, however, say when they tried to draw on that investment, the funds were obsolete, making their investments essentially worthless.
Chen filed the company’s articles of incorporation in California in September 2010, and as of Friday, it is still listed as an active corporation in the California Secretary of State’s database.
AFG is not listed in California, but it did file articles of incorporation in Delaware in 2002.
USFIA released a statement on Tuesday defending themselves against the allegations. The statement was released in Chinese and when translated refuted claims relating to its legality, stating that USFIA was a legally registered company in the state of California, and it denied being an investment company and, instead, identified itself as a gem company.
WHAT ARE INVESTORS’ CLAIMS?
Local Chinese investors said through a translator Monday that they hedged their money in the company after meeting with Wuo, who gained their trust because he is an elected official.
San Gabriel-based attorney Long Z. Liu, who plans to file a class action lawsuit on behalf of the victims, said people believed in the promises made by the company because it featured a member of the U.S. government.
“Chinese investors have the idea that if the whole thing is backed up by government, it must be legitimate,” he said. “So if you say this business is blessed by a U.S. government official, people think ‘Not only is this legitimate, but it must be really profitable’ because that’s how it works in China. You have to work with government to have a successful business.”
Michael Liu and Jason Ning, two representatives for a group of some 50 disgruntled investors, plan to speak at an Arcadia City Council meeting about Wuo’s alleged involvement in the company.
Ning, who invested over $100,000 in GemCoin, said Chen told him the corporation has very close ties to Wuo.
“I think they may cheat individuals, but they will not cheat the government,” Ning said through a translator Monday.
Liu said he, along with members of his family and friends, invested $350,000 in USFIA in 2013 but never saw a return on that investment. He said he was banned from the company offices after reporting his claims there, leading him and others to organize protests to alert others about their dealings with the company.
A handful of other victims spoken to on Monday requested to keep their identities concealed for fear of retaliation.
WHAT AGENCIES ARE INVESTIGATING THE COMPANY?
Among the agencies conducting investigations are the FBI, IRS, SEC and the California Department of Business Oversight, a consumer protection agency that regulates financial services.
Officials from the Department of Business Oversight confirmed Tuesday that it is conducting an investigation into USFIA and its dealings.
At least one investor, Ning, said he and his wife Bonnie have been contacted by an FBI field agent in West Covina, as well as representatives from the IRS and SEC.
A spokeswoman from the SEC declined to comment, and calls to the IRS and FBI were not returned.
Sgt. Brett Bourgeous of the Arcadia Police Department said it is also investigating complaints filed by other investors over the past week. The detective said the claims are related to fraud and perceived threats, but could not provide any further details as the investigation is ongoing.
Arcadia City Manager Dominic Lazzaretto said he and the city attorney regularly review all concerns related to GemCoin, but to date, they had not found any direct evidence of criminal activity.
“Since the last time we spoke, there have been some members of the public that have come to the police department to report some concerns they have with GemCoin, and our police department is investigating those,” he said Tuesday.
