New Jersey Bureau of Securities Revokes Registration
of Midland Park Broker Who Has Admitted to Defrauding Clients and Stealing Hundreds of Thousands of Dollars for His Own Use, Concurrent Investigation Leads to Federal Guilty Plea
NEWARK -- The New Jersey Bureau of Securities today issued an order that revoked the registration of and issued a civil monetary penalty against Kwen Young Chun, a Midland Park resident and former broker, after its investigation found that he unlawfully stole hundreds of thousands of dollars from at least eight of his clients and used investor funds for his and his family's personal benefit.
Concurrent with the Bureau's action, Chun pleaded guilty Wednesday before U.S. District Judge Susan D. Wigenton to one count of mail fraud in Newark federal court in connection with these actions. The mail fraud charge to which Chun pleaded guilty carries a maximum potential penalty of 20 years in prison and a fine of $250,000. Sentencing is scheduled for November 2, 2015.
"As a result of the action taken by the Bureau of Securities and others, Chun will no longer pose a threat to hard-working people who are seeking to build their assets," Attorney General John J. Hoffman said. "We're continuing our oversight of the state's investment industry in order to both protect investors and to hold rogue employees such as Chun accountable for their actions."
Bureau investigators found that Chun, a former employee at MetLife Securities, Inc., engaged in dishonest or unethical conduct with at least nine customer accounts. He stole customer funds without authorization and unlawfully deposited them into his own bank account or into an account he controlled, using the identity of one of his customers. Chun then used the funds for his own personal benefit, and also for the benefit of his wife and daughter.
"In order to conceal his deceit, Chun stole a client's identity to create a bank account, so that he could transfer the defrauded funds for his own use," said Steve Lee, Acting Director of the New Jersey Division of Consumer Affairs. "His attempts at covering his tracks ultimately failed due to the hard work of the Bureau of Securities and others."
In one instance, Chun stole client funds earmarked for the purchase of an annuity that in reality was never purchased. In another matter, a client obtained a loan from his life insurance policy, with the intent that Chun would invest the funds. Instead, Chun transferred the money for his own use.
Laura H. Posner, Chief of the New Jersey Bureau of Securities, noted that "Chun took advantage of vulnerable investors, many of whom had limited English speaking abilities or did not understand what Chun was purporting to do with their money. The Bureau urges people not to take part in any investment unless you first have a clear understanding of what the investment is and what the benefits and risks of the investment are – particularly where, as here, you are being instructed to sell out of a previously-held product for a new product that promises higher returns."
Rudolph G. Bassman, Chief of Enforcement for the Bureau of Securities, led the investigation of this matter.
Deputy Attorney General Isabella Stempler from the Division of Law's Securities Fraud Prosecution Section represented the State with the assistance of Division of Law attorney Brian DeVito.
The Bureau appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey, under the direction of U.S. Attorney Paul J. Fishman.
The Bureau can be contacted toll-free within New Jersey at 1-866-I-INVEST (1-866-446-8378) or from outside New Jersey at 973-504-3600. The public is encouraged to visit the Bureau’s website at www.njsecurities.gov .