A council member and former mayor of Arcadia, Ca. has been accused of using his government position to lend credibility to a company now under investigation by federal and state agencies for allegedly scamming hundreds of thousands of dollars from victims in the U.S., and potentially many more abroad.
Some 10,000 people in the U.S., including 3,000 in California, invested in the Arcadia-based U.S. Fine Investment Arts (USFIA), according to attorney Long Liu, who represents several Chinese Americans who believe they were scammed.
There are another 80,000 victims in China who collectively invested $160 million in the company that claims to sell a new digital currency called “Gemcoin” backed by Amber gemstones from mines in Dominican Republic and Mexico, Liu said.
“What the company is promising is a fictitious tale. This is not like a real investment because it will never be realized or returned,” Liu said.
Some investors were told for every dollar they put into the company, they would receive $64 when the company went public within six months, some 640 times the invested principal, Liu said. On its web site, USFIA claims those who invest $2,000 can increase their investment to $5,200 in under a year.
Arcadia Council Member John Wuo played a prominent role in promoting the venture, appearing on stage at events, in the company’s marketing materials, and on the company’s web site, Liu said. A former mayor of Arcadia, Wuo stood alongside company president Steve Chen and principal Solomon Yang when he called Gemcoin a “breakthrough in finance”, ultimately convincing investors the company was reputable and their investment would be secure.
“John Wuo played a significant role in terms of those people being victimized,” Liu said. “He has a lot of appeal for Chinese investors. If they know a top political leader endorses a business, they believe the business is legitimate and will be very profitable. That’s the way it is in China and they believe it is the same way in America.”
The operation grew exponentially because it was run as a “pyramid scheme,” with investors rewarded for bringing in stakeholders, Liu said. USFIA also allegedly targeted Chinese nationals looking to obtain U.S. citizenship.
Wuo could not be reached for comment Friday, but has said publicly he has no ties to Gemstone or USFIA. However, Wuo was seen in the lobby of the USFIA headquarters on Monday, the Pasadena Star News reported.
USFIA principals could not be reached for comment but they issued a brief statement on their website claiming USFIA is not an investment company and instead is a "gemstone" company and the company does not pay for recruitment of other investors or offer US EB-5 Visas in exchange for investments.
The FBI, U.S. Attorney, IRS and SEC and the Department of Business Oversight, a consumer protection state agency in California, have joint ongoing investigations into the case.