Stoltmann Law Offices has been following the Justice Department’s case against former Ameriprise Financial advisor Yilin Hsu Lee, a/k/a Li Lin Hsu, since 2016 when she was barred by the Financial Industry Regulatory Authority (FINRA). On Friday, January 31, 2020, the Justice Department announced that Hsu had been sentenced to 136 months in prison – more than 11 years – for swindling her clients out of almost $8.2 million dollars. Amongst her more than 20 victims were members of her family, an all too common fact in Ponzi scheme cases like this. Although she has been ordered to pay over $5 million in restitution as part of her sentence, it is unlikely she will ever be able to repay even a fraction of what she owes to the victims.
According to the U.S. Department of Justice, Hsu’s scam ran from February 2014 to May 2018. During this time, it was alleged that she falsely represented to investors that she would invest their money safely. Instead of investing the money conservatively as she represented, Hsu converted her clients’ money and used the funds to buy homes in Diamond Bar, California, a Tesla automobile, an expensive stay at the Peninsula in Paris, France, and spent thousands of dollars of her clients’ hard-earned money during shopping sprees at Hermes and Chanel.
Hsu gained the trust of her victims, mostly members of the Chinese American community in Southern California, by speaking to them in their native Chinese or Mandarin. This is called Affinity Fraud which is a specific type of scam where the schemer solicits his victims from a select community, usually one he is actually a part of. Affinity Fraud scams impact specific ethnic and religious groups. In Hsu’s case, she focused her fraudulent scheme on the Chinese American community. Her ability to speak the same language and understand the customs of her victims made her even more dangerous, and even easier for her victims to fall for her fraudulent sales pitch. As pointed out by the Securities and Exchange Commission, Affinity Fraudsters may not actually be members of the community they seek to victimize, they just pose as a member, in a true crime sense.