SACRAMENTO, Calif. — A 51-year-old Colorado man on Thursday pled guilty to his role in a Korea-linked “bust out” scheme that swiped cash from dozens of banks across California.
Jeffrey Kim pled guilty to one count of bank fraud and one count of aggravated identity theft, according to court records. He’s scheduled to be sentenced on October 6th alongside his ringleader, Kyung Min Kong.
According to court documents, Kim was initially detained at a Wells Fargo Bank in Monument, Colorado in August of 2017 after officers responded to a call of a fraud in progress. Bank employees called the cops on an adult male who tried to open a bank account using a suspicious Korean passport in the name of Song Min Yoo.
The man told authorities that he had just arrived from Seoul, South Korea and was enrolled at a community college in the area, but after an officer confronted him with inconsistencies about his documents, he came clean.
The man admitted that his real name was Jeffrey Kim, and that another man by the name of Ming had provided him the documents and dropped him off at the bank. He said the man paid him $500 for each fraudulent account he opened, and that he had opened four other accounts during his time in Colorado.
Kim was arrested on several charges and ended up pleading guilty to felony forgery for a two-year sentence of probation, however, investigators soon discovered that the scheme in Colorado wasn’t a one-off incident. It was linked to a “large-scale organized crime group” based out of Korea that busted out bank accounts. The group allegedly swindled the banks out of over $2 Million.
“Busting out” is a scheme that involves opening fraudulent accounts at banks, depositing a small amount of cash, and aging the account. The fraudsters then take advantage of the bank’s user benefits to cash a counterfeit check and make withdrawals against that same check before it actually clears with the bank – leaving the bank with missing cash.
“Once the fraudulent nature of the check is discovered, and the check has been dishonored by the financial institution, the account has been “busted”, resulting in a loss to the financial institution,” IRS Special Agent Christopher Fitzpatrick explained in a probable cause statement in support of Kim’s federal charges.
Investigators say bank records show the group started in San Luis Obispo, moving north and hitting banks throughout the Bay Area and Sacramento. They then did the same thing in Arizona and Texas before Kim’s arrest in Colorado.
The Special Agent said the group’s tendency to move around made it hard for law enforcement to zero in on them, citing the “lag time” between when the phony check is cashed and when accounts are “busted out”.
“By the time the accounts are adjudged to be busted-out, the conspirators have moved to a new geographical area,” he said.
Six others, besides Kim, have been charged in the scheme. His ringleader and phony passport supplier, Kyung Min Kong, has pled guilty and is scheduled to be sentenced on October 6 alongside Kim. Charges are currently pending against Ki Jiang, Il Chung, Hee Soung Oh, Bon Soke Hong, and Jong Eung Lee, according to a spokesperson for the US Attorney’s Office.
Court papers say the group first struck at a BBVA Compass location in Clovis in March of 2017. One of Kim’s co-conspirators opened a checking account with $100 in cash with the Nevada-issued driver’s license of Young Chun Kim. Sixty-five checks for amounts between $991 and $2,998, were cashed with the account. All of them bounced, and investigators say the majority of the checks were written to a Nam H. Park.
The previous month, the group opened an account at Chase in the name of Nam Hee Park. A fraudulent passport from the Republic of Korea was presented to employees to open the account. A second account in Park’s name was opened at Wells Fargo, using the same phony Korean passport.
The group then hit BMO Harris, copying the scheme again. They presented a phony ID to steal the identity of Shin Yoo Kim, cashing thirty-six checks in two days for a total of $76,899.
The checks were made payable to Doo Hyo Bang, and Kim was clocked by security cameras making several cash withdrawals at banks in Orangevale and Roseville.
Kim is also accused of buying a $995 money order using a debit card in Bang’s name from a post office in Carmichael. The order was deposited into an account made in the name of Chang Jhi and was used to age it so the fraudsters could withdraw money against phony checks quicker. Once the account was bust out, the bank had sustained a loss of over $9,000.
Two more hits, made at Umpqua Banks and the El Dorado Savings Bank, are detailed in court records. Seventy checks were cashed at four banks in Arizona and California for over $139,000. Kim made seven of those transactions, and a co-conspirator withdrew thousands more from ATM machines in the Los Angeles area.
For the final run detailed in court records, Kim rented a mailbox at Granite Bay Postal using yet another fraudulent passport in the name of Yu Lan Xie. The passport photograph, investigators later found out, was the same photo used to open the Yoo account in Monument, Colorado – a photo of Kim.
Sixty-seven checks from banks across Texas were mailed to the PO box on Douglas Boulevard, with Kim telling bank officials he was a sales manager for a trading company. All of the checks bounced, as there was only $100 in the checking account, and once it was busted out, it was revealed the fraudsters had gotten away with over $100,000.
When eyeballing the Texas bank incidents, investigators found yet another common theme: Kim was the one moving the money around. He was pictured on surveillance video at seven different banks, where he personally withdrew and deposited over $11,000 in furtherance of the scheme.
Based on Kim’s unsuccessful bust-out attempts, the intended loss to the the banks was $380,429.06 – only a dent in the group’s total intended loss of over $3 Million to over 25 different financial institutions.