Critical to conducting an offering fraud is trust. Those running the scheme frequently reach out to potential investors in an effort to build the trust and confidence necessary to secure a sale of shares. In many instances schemers approach friends and family, members of their church or those in some group for which they can claim a bond that becomes the beginning of trust and, all too often, the end of investors’ cash. The Commission’s most recent offering fraud action centered on a Korean national selling shares in that country, SEC v. Seong Yeol Lee, Civil Action No. 3:23-cv-00125 (D. Conn. Filed February 1, 2023).
Defendant Lee is a Korean national who has resided in Stanford Connecticut since 2020. Defendant Amritrust Corporation, a firm with no business, is also a defendant. That entity is now incorporated in Wyoming. Previously the firm was incorporated in Michigan and Georgia.
Since early 2020 Defendant Lee has held executive positions with Amritrust. In that year, he appointed his daughter, Alice Choi, to the board of directors. She had not experience for the position. The firm reported the appointment in a filing with the Commission and, in addition, that it has a corporate secretary. That person also lacked the experience required by the position.
Amritrust eventually became a public company. Nevertheless, it typically failed to timely file the required documents with the Commission.
Beginning in 2019, and continuing through late 2022, Amritrust received over $20 million from individuals in Korea who were recruited to invest in the company by Defendants and their affiliates. The stock records of the company reflect about 2,000 Korean shareholders. Witnesses in Korea estimate that the number of investors is closer to 4,000.
Defendants recruited investors in Korea through information sessions, email, solicitations and word of mouth. According to one Witness, Defendants used another entity, Bespoke Korea, to assist with the recruiting efforts. Bespoke Korea had few employees. Amritrust has no employees and no operations. Yet investors in that firm were assured of guaranteed returns and furnished other misrepresentations. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b). The case is pending. In a separate proceeding the Commission delisted Amritrust. See Lit. Rel. No. 25627 (February 1, 2023).