An ex-Ameriprise representative who ran a Ponzi scheme that scammed 20 of her clients — including some of her own relatives — out of more than $8.1 million was sentenced Jan. 31 to 136 months in federal prison, according to court documents and the U.S. Attorney’s Office for the Central District of California in Los Angeles.
Ameriprise didn’t immediately respond to a request for comment Friday. However, the company suspended Li Lin Hsu, 42, of Diamond Bar, California, March 9, 2015, and terminated her on March 27, 2015, for “company policy violations related to maintaining a beneficiary relationship with a client, complaint handling, commingling funds, and conducting business with a foreign client,” according to a disclosure on her profile at the Financial Industry Regulatory Authority’s BrokerCheck website.
Ameriprise also found that Hsu “violated company policies related to … reusing previously submitted client forms,” according to the statement on BrokerCheck.
Hsu, who also goes by the name Yilin Hsu Lee, was sentenced by U.S. District Judge Andrew J. Guilford. The judge also ordered her to pay $5.3 million in restitution to her victims. Hsu had pleaded guilty in February 2019 to one count of wire fraud.
Between February 2014 and May 2018, Hsu “lured in her victims with the promise that she would safely invest their money, [and] gained the trust of her victims — nearly all of whom are members of Southern California’s Chinese community — by speaking to them in their native language and telling them she was part of their community,” according to the U.S. Attorney’s Office.
However, Hsu wasn’t investing any of her victims’ money, and instead allegedly using their funds to buy homes in Diamond Bar and Irvine, a Tesla car, a vacation at the Peninsula Hotel in Paris, and thousands of dollars’ worth of luxury goods at high-end stores including Harry Winston, Chanel and Hermès.
“In the hallmark of a Ponzi scheme, Hsu also used money she stole from later investors to make lulling payments to early investors,” according to the U.S. Attorney’s Office.
In 2016, FINRA barred Hsu from working for any FINRA member firm in any capacity.
Shortly after Ameriprise terminated her, Hsu started her own companies — American Capital Trading Group and American Capital Republic — where she allegedly sought out more investors and swindled them. Hsu told those new clients their funds would be invested in low-risk municipal bonds. However, just like with her Ameriprise accounts, she didn’t invest the funds at all, but instead spent the money on herself, according to the U.S. Attorney’s Office.
“She fabricated account statements that showed her victims’ funds were safely invested and lulled her victims into believing the account statements by making nominal ‘interest payments’ that originated from the funds of other victims,” according to prosecutors. She also lied to one of her victims when she said American Capital Trading Group, which she controlled, was an Ameriprise affiliate, prosecutors said.
In 2016, Hsu “repeatedly lied under oath” to the Securities and Exchange Commission, which had started investigating her, according to the U.S. Attorney’s Office. After the FBI arrested Hsu in April 2018 and in violation of a court order, Hsu met with two of her victims and told them to lie to the FBI that her plan had always been to invest in the two properties she had bought, according to prosecutors. She also allegedly induced them to give her an additional $450,000, which she then used to pay back another victim.
— Check out Ex-Morgan Stanley/Wells Fargo Rep Sentenced to 30 Months for Fraud on ThinkAdvisor.