SAN FRANCISCO — Greater than 100 victims are tied up in a $39 million Ponzi scheme run by 41-year-old Derek Chu of Alamo, in line with federal prosecutors. 

He was arrested Might 2 and indicted for working a scheme and spending at the least $7 million to fund his personal lavish way of life. He’s accused of conning victims to put money into a faux scheme to purchase and resell tickets and luxurious suites at Oracle Enviornment, Staples Middle and Chase Middle between 2013 and 2020.

The indictment alleges that Chu lured unwitting traders by making materially false misrepresentations, together with how the investor funds could be used, and the way traders could be repaid. 

“Chu commingled the traders’ cash between his personal private accounts and his firms’ accounts, which resulted in investor cash getting used to repay different, earlier traders, and for different unrelated bills,” federal prosecutors mentioned in a press launch. 

Lots of the victims are from San Francisco’s Chinatown, in line with lawyer Jaynry Mak, who represents a couple of dozen victims. 

Kingsley, as he prefers to be referred to as for this story, spoke to KPIX reporter Betty Yu on behalf of his mother, a San Francisco resident, who’s out greater than $3.5 million.

“My mother needed to undergo all that, she did not communicate English. She needed to undergo all that whereas being in disgrace, being embarrassed, however as we speak, with every thing that has transpired, she has actually realized that it actually is not in regards to the cash anymore,” he mentioned. “It is about getting these guys right here and it is actually not our time to be scared. They need to be scared now.”

Mak, the household’s lawyer, filed lawsuits towards Derek Chu, Suitelife Norcal LLC, and his father Felix Chu, a longtime household buddy and well-known life insurance coverage agent in Chinatown, who has since retired.

“Nearer to 2016 is when all the cash offers began occurring, the place it’d begin out as, ‘Hey, when you give me some cash I may give you some curiosity, proper? 11%, 18%.’ Sounds actually good,” mentioned Kingsley. “So to start with the quantities have been within the hundreds and it was alright, and Felix would pay it and it was fairly constant, he is sort of constructing his credit score, after which after that it began climbing as much as tens of hundreds, lots of of hundreds, and later it concerned the sale of a property, that took it to the thousands and thousands.”

However then Kingsley mentioned the curiosity funds slowed after which stopped coming altogether. That cash was diverted for Chu’s private profit, in line with federal prosecutors.

“A major quantity of those funds went in direction of paying his personal private bank card payments, towards luxurious automobiles akin to Porsches, jewellery, designer sneakers and purses…whereas these victims gave them their complete retirement funds, cashed out their 403B accounts,” mentioned Mak. 

Mak filed an preliminary police report in 2019, when SFPD started investigating. Quickly after, extra victims shared comparable tales with Mak. 

“These are like mother and pops; the previous sufferer, his mother was a garment employee. The opposite victims, they’re eating places they’re actually saving their nickels and dimes,” she mentioned. “We have had victims that have been extraordinarily suicidal which we happily have been capable of work by way of. We had one other sufferer who had a coronary heart assault and has subsequently handed which we imagine is expounded to this.”

She additionally shared typical promissory notes signed by Derek and Felix Chu.

“The promissory notes have been easy one-page paperwork with no collateral. It was constructed on belief. It was based mostly on relationships of 30 years. Folks that they thought-about uncles or second fathers. The promissory notes are so generic, it is mainly equal to a handshake,” she mentioned. 

Chu has been charged with eight counts of wire fraud and three counts of cash laundering. Every wire fraud rely carries a most sentence of 20 years in jail and a $250,000 nice. Every cash laundering rely carries a 10-year sentence and a $250,000 nice. 

“You bought the Warriors, you bought Giants, or Lakers, no matter. You throw in these model logos on it, this individual have to be reliable, proper? He works with massive logos, and the truth that he related Warriors with it in all probability helped his trigger,” mentioned Kingsley. “And luxurious stuff, I hope he loved it. It is come to an finish.”

Prosecutors are additionally urging different victims to return ahead.  

“When you’re first era and above, be there on your dad and mom,” mentioned Kingsley. “In case your dad and mom are immigrants right here, likelihood is they do not know a complete lot. Laborious work is all they know. And so they accumulate this wealth and when you see that they know somebody that they actually, actually belief that they know exterior the household and you do not appear to know, that is in all probability a purple flag.”

Chu’s subsequent look in court docket is scheduled for Might tenth.