LOS ANGELES – An attorney who pleaded guilty to wire fraud and tax evasion charges – and who prosecutors say defrauded a dozen clients out of at least $8 million in an investment fraud scheme – was sentenced today to 63 months in federal prison.

            Stephen Young Kang, 46, of Newport Beach, was sentenced by United States District Judge George H. Wu, who rejected the defendant’s request for a three-year sentence.

            During today’s sentencing hearing, several of Kang’s victims described in detail the devastating financial and emotional impact of the fraud scheme. Two of the victims commented that Kang’s fraud led to the “darkest years” of their lives.

            Kang pleaded guilty in November to two counts of wire fraud and one count of tax evasion. When he pleaded guilty, Kang admitted to orchestrating a three-year-long scheme that defrauded clients who had engaged the attorney to provide legal or investment services. Prosecutors said that Kang used his position as an attorney to gain the trust of his clients, and then Kang bilked them in a Ponzi-like scheme in which none of the money designated for investments was actually invested.

            Kang specifically admitted that he defrauded a food distribution company, Ottogi America, Inc., which had hired him to help the company purchase properties near its distribution center in Gardena. Ottogi wire transferred funds to a trust account in Houston, Texas, to be used for the purchase of the properties. But Kang admitted that he did not use the money to invest in properties. Rather, Kang admitted that he caused the funds to be transferred to other bank accounts that he controlled. Prosecutors argued in court that Kang used a substantial portion of Ottogi’s funds to pay for personal expenses and business ventures, as well as to make partial payment to other victims.

            Kang also admitted that he defrauded a Texas victim out of $500,000 in 2013 by falsely representing that he would invest the $500,000 in a company called Pegasus Capital Ltd., LLC. When the victim demanded repayment, Kang agreed in September 2015 – which was after he was initially indicted in this fraud case – to provide the victim with a “first priority security interest” in a term life insurance policy. Kang, however, failed to disclose to the victim that the life insurance was worth only $250,000, that Kang’s wife was the sole beneficiary of the policy, that the policy was first applied for and approved on August 28, 2015, and that defendant had not yet made any payments on that policy. Prosecutors said that Kang offered to sign over the exact same life insurance policy to three other victims.

            “Attorneys must be held to a higher standard of conduct, because their clients heavily rely on their advice,” said United States Attorney Eileen M. Decker. “This defendant chose his own personal gain over the interests of his clients, and they suffered greatly as a result. This crime and the resulting harm warranted the significant sentence imposed by the Court today.”

            “The defendant conned his victims, in part, by using the veneer of his legal practice to lend legitimacy to his scheme,” said David Bowdich, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “Multiple agencies worked collaboratively to successfully investigate this case, including IRS agents and detectives with LAPD, whose contribution was significant."

            In relation to the tax evasion count, Kang admitted that he received more than $1.5 million in income in 2013, but he willfully attempted to evade the assessment of income tax by failing to file a federal income tax return for calendar year 2013 and using corporate accounts to conceal the income he received.

             “Professionals, including attorneys, who use their position of trust to create elaborate schemes that have no purpose other than to mislead others and defraud the IRS will be prosecuted to the full extent of the law,” stated Acting Special Agent in Charge Anthony Orlando of IRS Criminal Investigation. “Today’s sentence reinforces our commitment to every American taxpayer to identify and prosecute those who devise illegal investment schemes designed to promote their own wealth and evade their tax obligations.”

            Kang was ordered to return to court on March 28 for a hearing to determine the amount of restitution he will be ordered to pay to his victims.

           The case against Kang is the product of an investigation by the Federal Bureau of Investigation and IRS Criminal Investigation. This case was prosecuted by Assistant United States Attorneys Julian L. André, Anil J. Antony and Poonam G. Kumar.