A Bellevue man who regulators say bilked clients of his investment advisory firm has filed for bankruptcy while still owing $1.3 million as a result of a settlement with the Securities and Exchange Commission. Meanwhile, former clients are objecting to a debt discharge.
A Bellevue man who regulators say bilked clients of his investment advisory firm has filed for bankruptcy while still owing $1.3 million as a result of a settlement with the Securities and Exchange Commission.
Now, former clients who want to recoup their losses are intervening in the case in order to keep Chris Yoo from wiping out the debt he allegedly owes them.
Yoo, who in September settled a civil lawsuit brought by the SEC, requested protection from his creditors at the U.S. Bankruptcy Court in Western Washington in January.
In the bankruptcy petition, which also includes his wife, Yoo declared he had $66,409 in total assets, including $50 in cash. At the time of the petition, the man who regulators and investors say had managed millions in funds worked as a car salesman in Renton.
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According to the filing, the couple live in a six-bedroom Bellevue house that last year sold for $2 million (and that Zillow values at $2.7 million). The Yoos, who declared a combined income of $2,730, owe $3,800 in monthly rent for the house.
In a court filing on Monday, David and Esther Fleming, a retired Kirkland couple, and other plaintiffs who collectively invested more than $2.5 million with Yoo, said that upon asking for their money when the SEC settlement became public, Yoo refused. The debt owed to them, the plaintiffs claim, can’t be discharged in a bankruptcy.
“In case there are assets we want to preserve our rights,” said Dave Neuman, an attorney representing the plaintiffs.
David Fleming, 73, said that when they met Yoo they found him “very, very plausible, a charming man.”
After trying to withdraw a substantial sum of money from their investments with Yoo last November in order to buy a car, Yoo had disappeared, Fleming said. Now the couple are considering selling their house and moving out of state, to a cheaper location they can afford after the loss of their savings. Yoo also handled investments for Esther Fleming’s mother, who is 94. That money has also disappeared, the Flemings said.
“The disruption to our lives is quite enormous,” David Fleming said.
The Flemings said that on Wednesday they met with an agent from the Federal Bureau of Investigation, which they said was gathering information for an investigation on Yoo. The FBI declined to comment.
Another set of plaintiffs, also former clients of Yoo and all Korean citizens, claim in a separate court filing that the investment adviser preyed on recent Korean immigrants with little knowledge of U.S. investment markets.
They claim Yoo and his wife “have been making efforts to avoid their former investors” since the case became public, and that they are “actively attempting to hide assets.”
One of Yoo’s attorneys declined to comment. Another attorney, who represents him in the bankruptcy case, didn’t immediately return a call for comment. The SEC said it would not comment on a particular case.
It’s unlikely that, despite the bankruptcy case, Yoo could dispel any obligations to the government. The U.S. Bankruptcy Code states that debt stemming from penalties related to fraud or violation of securities laws can’t be discharged.
In the lawsuit Yoo settled last September, he was accused of fraudulently inflating the assets of a fund in order to withdraw nearly $900,000 in management fees based on the false amount.
Yoo neither admitted nor denied the SEC’s allegations. He and Summit Asset Strategies agreed to repay $889,301, plus prejudgment interest of $104,632 and a penalty of $150,000.