Federal Court Orders Husband and Wife Team and Their Company to Pay Defrauded Customers More Than $1 Million in Connection with a Futures Trading Scheme

This post was originally published on this site

February 8, 2019

The Commodity Futures Trading Commission (CFTC) announced today that on December 27, 2018 a Washington State federal court ordered Bellevue, Washington residents Sung Hong a/k/a Lawrence Hong or Laurence Hong, his wife, Hyun Joo Hong a/k/a/ Grace Hong, and their company Pishon Holding LLC to pay more than $1.25 million in restitution in connection with an enforcement action brought by the CFTC charging the defendants with fraudulent solicitation and misappropriation involving futures contracts.  In addition to the restitution, the Court Order also imposes a permanent trading and registration ban on the Hongs and Pishon and prohibits them from violating provisions of the Commodity Exchange Act (CEA) as charged.

The Court’s Order stems from a CFTC Complaint filed on June 1, 2017 in the U.S. District Court for the Western District of Washington.  [See CFTC Press Release 7569-17].  In the Order, Judge Marsha Pechman found that the Hongs and Pishon misappropriated $1,259,317.77 from their customers.  Additionally, the court found that the Hongs and Pishon fraudulently solicited more than $11 million dollars from customers for the purpose of trading futures contacts.  The court further found that the Hongs and Pishon lied about, about among other things how much money they had under management; Laurence Hong’s prior trading success; and how trading fees would be deducted from customer accounts.  At the same time, the Court Order found, the Hongs and Pishon failed to tell customers that Laurence Hong had been imprisoned previously for 33 months in connection with wire fraud charges. 

In a parallel criminal case filed in the United States District Court for the Western District of Washington, Laurence Hong and Grace Hong pleaded guilty on March 27, 2018 and March 30, 2018, respectively, to multiple criminal counts.  See Case No. CR17-163TSZ.  On October 11, 2018, Laurence Hong was sentenced to a 180-month prison term and Grace Hong was sentenced to a 72-month prison term.  The court ordered that the defendants also pay restitution in the criminal matter.  In recognition of the prior restitution award in the criminal matter, Judge Pechman ordered that the defendants may offset their civil restitution obligation with payments in the criminal matter on a one-to-one basis.

The CFTC cautions victims that restitution orders may not result in the recovery of money lost because the wrongdoers may not have sufficient funds or assets.  The CFTC will continue to fight vigorously for the protection of customers and to ensure the wrongdoers are held accountable.

The Division of Enforcement thanks the United States Attorney for the Western District of Washington and the FBI for their invaluable assistance and cooperation.  

The CFTC Division of Enforcement staff members responsible for this case are Kevin Samuel, Ilana Waxman, Kim Bruno, Alison Wilson, and Rick Glaser.