An Orange County attorney who prosecutors believe took at least $8 million in investment capital from clients and used the money for personal expenses and luxury items pleaded guilty today to federal wire fraud and tax evasion charges.
Stephen Young Kang, 46, of Newport Beach, entered his plea before U.S. District Judge George Wu, who scheduled a Feb. 11 sentencing hearing, according to the U.S. Attorney’s Office.
Kang admitted in a plea agreement filed in Los Angeles federal court that, beginning as early as October 2012 and continuing through September, he “knowingly and with intent to defraud, devised, participated in, and executed a scheme to defraud clients to whom defendant had agreed to provide legal or investment services,” according to the document.
“Unfortunately, Mr. Kang put his personal financial interest above those of his clients who entrusted him to act on their behalf,” said David L. Bowdich, the assistant director in charge of the FBI’s Los Angeles field office. “By virtue of his profession and the trust afforded to him, his actions are all the more egregious.”
Kang told the court that he defrauded a food distribution company, Ottogi America, that had hired him to help the company purchase properties near its distribution center in Gardena.
Ottogi transferred funds to a trust account in Houston, Texas, to be used for the purchase of the properties, but Kang caused the money to be deposited in other accounts that he controlled, federal prosecutors said.
Prosecutors believe that Kang then used a substantial portion of Ottogi’s money to pay for personal expenses and business ventures, as well as to make partial payment to other victims.
Kang also admitted defrauding a Texas victim out of $500,000, officials said.
“Attorneys owe their clients a special duty of loyalty and trust that is fundamental to our legal system,” said Eileen M. Decker, the U.S. attorney in Los Angeles. “The Department of Justice will defend this principle by holding responsible those who violate this duty of loyalty for their own personal gain.”
In a tax evasion count, Kang admitted that he received at least $1.5 million in income in 2013, but attempted to evade the assessment of income tax by failing to file a return and using corporate accounts to conceal the money, prosecutors said.
“Professionals, including attorneys, who create elaborate schemes that have no purpose other than to mislead others and defraud the IRS run the very high risk of prosecution,” said Erick Martinez, special agent in charge of Internal Revenue Service-Criminal Investigation. “These individuals face severe consequences including imprisonment and substantial fines.”
As a result of his guilty pleas, Kang faces up to 45 years in federal prison at sentencing, according to the U.S. Attorney’s Office.