The former vice president of Eastern Tools and Equipment was arrested earlier this week on charges of bank fraud and criminal conspiracy. Chung Yu “Louis” Yeung was indicted in October but not arrested until this week. Prosecutors say that he defrauded United Commercial Bank of $9.2 million dollars. UCB later went under after first receiving $299 million in TARP monies.
Short for the Troubled Asset Relief Program, TARP was the government’s response to the banking crisis in 2008. The federal government spent hundreds of billions of dollars bailing out banks in an effort to keep the economy afloat. Most of that money was repaid but in some instances, such as UCB, the bank failed anyway.
False Claims Act and Whistleblower Lawsuits
Because TARP involves taxpayer funds, any misuse of those funds can potentially be prosecuted as a whistleblower lawsuit under the federal False Claims Act. That law pays whistleblowers up to 30% of whatever the government collects. We are aware of some corrupt bank officials stealing money even while their bank was teetering on the brink of insolvency.
The indictment claims Louis Yeung and the company’s president, Guo Xiang “David” Fan, pulled off the scam by creating 20 shell companies. In a complex series of transactions, the men moved money around through the various companies to make it appear that the business was profitable and had increasing sales. The men used the fake accounts receivable to borrow money from UCB and later East West Bank after UCB went under in 2009. Fan has also been indicted but remains at large.
Defrauding a federally insured bank can also pay whistleblowers. Under the FIRREA statute (Financial Institutions Reform Recovery and Enforcement Act), whistleblowers with information about anyone who does harm to an FDIC insured bank could earn up to $1.6 million in award money. Outgoing Attorney General Eric Holder has asked Congress to increase the monies available for FIRREA whistleblowers.
Claiming an award under the False Claims Act involves filing a whistleblower lawsuit in federal court. Prosecutors investigate the case and ultimately can take it over, let the whistleblower prosecute the case without government assistance or seek its dismissal. Claiming a FIRREA award doesn’t involve a whistleblower lawsuit but does require cooperation with the Justice Department.
We have seen few TARP whistleblower lawsuits but any fraud against the government or a government funded program qualifies. Typical cases involve Medicare fraud, government contracts and residential mortgages. (Most home loans are backed by Fannie Mae, Freddie Mac or the FHA.)
Think you have the information necessary to file a whistleblower lawsuit or claim an award under the FIRREA bank fraud law? Give us a call! Our whistleblower lawyers have brought several, billion dollar cases. Not every case is that big but each one is equally important to us. We help our clients stop fraud and collect the maximum amount of award monies.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept in strict confidence. You need not be a U.S. resident to qualify for an award.