California Department of Corporations Announces Arrest of Robin Kyu Cho of Citi Travelers Insurance Management; Cho Allegedly Defrauded Korean American Clients of $1.9 Million

Business Wire, June 30, 2006

SACRAMENTO, Calif. -- The California Department of Corporations (DOC) announces the arrest of Robin Kyu Cho, owner of Citi Travelers Insurance Management, a.k.a. Citi Travelers Scholarship Management of Los Angeles, for allegedly engaging in an investment scheme by which the defendant defrauded at least 11 members of the Korean American community of approximately $1.9 million.

Cho is charged with 118 felony counts including 52 counts of illegal offers and sales of securities, 52 counts of securities fraud and 11 counts of grand theft, among other counts.

DOC issued a desist-and-refrain order in January of 2006 against Cho and his companies to prohibit him from selling securities investments and making false and misleading statements.

Authorities from the Los Angeles County District Attorney's Office (LADA) arrested the defendant during a break in the administrative hearing that Cho requested to contest the desist-and-refrain order.

The case was originally referred to DOC by the Los Angeles Police Department (LAPD). Working jointly, DOC, LAPD and LADA coordinated efforts that led to the filing of criminal charges against Cho.

"Today's action demonstrates DOC's commitment to collaborate with law enforcement authorities to prosecute illegal conduct," said Corporations Commissioner Preston DuFauchard. "Hopefully, the actions taken by DOC and the Los Angeles District Attorney's Office will deter anyone considering this type of misconduct in the future."

From 1998 through December 2002, DOC alleges that Cho represented himself to be either licensed or failed to disclose that he was not properly licensed. During this period, he solicited financially unsophisticated friends, along with their family members and their friends, to provide funds for an investment in stocks, bonds and commodities which he claimed would yield a 4 to 6 percent monthly return.

DOC claims that clients were not informed that they were investing in a Ponzi scheme: a type of illegal pyramid scheme where money from new investors is used to pay off earlier investors until the whole scheme collapses.

Investors were not informed that Cho was investing their pooled funds in financially risky commodity futures, or that he had been losing his own funds since February 1996 and investors' funds from 1998 through September 2002.

An arraignment hearing occurred on June 29 at 8:30 a.m. at the Criminal Courts Building in downtown Los Angeles, Division 50, 5th floor.

DOC Counsel Michelle Lipton is responsible for DOC's participation in this case.

DOC is California's investment and financing authority and is responsible for the regulation, enforcement, and licensing of investment and financial services, securities, off-exchange commodities, franchises, independent escrows, consumer and commercial finance lending, residential mortgage lending, and payday lenders. Consumers should contact DOC to check on the status of the transaction or investment they are considering and the licensing status of the person who is selling it. Contact DOC's toll-free Consumer Resource Center at 1-866-ASK-CORP (1-866-275-2677) or visit www.corp.ca.gov.