Gemcoin Company Revises Business Plan Amid Fraud Allegations
Former Arcadia Councilwoman Defends Embattled Wuo as Residents Call for Resignation
By Joe Taglieri
A group of more than 20 dismayed Gemcoin investors and their supporters attended the Arcadia City Council meeting Tuesday demanding answers from Council Member John Wuo on his involvement with the controversial investment product and what to do about getting their money back.
Wuo, however, declined to respond to accusations of wrongdoing and calls for his resignation from the council. The longstanding Arcadia lawmaker also declined requests for comment after the meeting, which was heavily attended by a wide range of residents in addition to the contingent of exasperated Gemcoin stakeholders.
“I want to get an explanation from John Wuo,” Gemcoin investor Shandou Huang said during the council meeting with the help of a translator. “I have no idea what’s going to happen [or] what to do.”
Huang, an Arcadia resident who also goes by the name Sam Huang, said he staked thousands of dollars in Gemcoin and is now unable to collect any cash return on his investment.
A woman who identified herself as Li Li said she invested $20,000 in Gemcoin because of Wuo’s endorsement and now is very concerned that the cryptocurrency is a scam.
“More than 300,000 people around the world have invested in this company, and most of them are from Asia,” Li Li said. “Right now we need Mr. John Wuo to help us get our investments back because we think we were robbed by the owners of this company.
“Right now, I’m pregnant and I need to raise my baby,” she said, then paused her remarks to council members as she fought back tears.
Wuo has on several occasions publicly denied he has a financial stake in the cryptocurrency controlled by Arcadia-based entrepreneur Steve Chen’s USFIA Inc. and Alliance Financial Group. The companies have recently drawn the investigative attention of federal and state law enforcement agencies.
Wuo has also downplayed his level of association with Chen despite a steadily increasing stream of evidence linking the two.
Amid mounting allegations by investors with complaints mirroring Li Li and Huang’s claims that Gemcoin is a fraudulent Ponzi scheme, USFIA released a statement Tuesday that attempts to clarify its business practices:
“USFIA sells gemstones and jewelry. In conjunction with a sale, USFIA provides free reward points which can be redeemed for other gemstones.
“USFIA uses distributors to actively sell products and to earn commissions on the sales of products. No commissions are paid for the recruitment of others.
“Please refer ONLY to the company’s official website (www.usfiainc.com) for real and accurate information related to the products, distribution, and reward points.
“USFIA employs a professional security company to ensure the safety of our products which are on display at USFIA’s headquarters in Arcadia, California.
“All our products are genuine gemstones, and the company has the ownership of gemstone mines.
“The company is not an investment company, instead it is a gemstone selling company.
“‘Gemcoin’ is a soon-to-be registered cryptocurrency product. USFIA does not sell ‘Gemcoin,’ rather ‘Gemcoin’ is being pursued by a separate entity.
“USFIA is not offering EB-5 visas.”
These assertions contradict the company’s prolific amount of print and online marketing material that has made bold claims about Gemcoin’s profitability and cutting-edge status as an investment product.
One notable contradiction in this seemingly extensive makeover of the company’s business plan is the attempt to distance USFIA from handling Gemcoin investments, which according to the statement is now under the auspices of an unnamed “separate entity.” Until now USFIA was extensively billed as Gemcoin’s managing organization.
Another major shift is the claim that “USFIA is not offering EB-5 visas,” which are extremely high-priced green cards available for wealthy immigrants.
“Congress created the EB-5 Program in 1990 to stimulate the U.S. economy through job creation and capital investment by foreign investors,” according to the United States Citizenship and Immigration Services.
The program invites entrepreneurs and their immediate families to apply for permanent residence, the USCIS website states.
A document obtained by Arcadia Weekly shows USFIA was selling EB-5 application services for $500,000 in 2014. EB-5 investors received “amber products worth up to $20,000” and 5 million “USFIA units.”
According to the document titled “USFIA, Inc. EB-5 Agreement,” clients were required to refer two additional EB-5 investors.
“Bonus earned from the Company can be used to pay EB-5 [$50,000] Attorney Fee or purchase units or amber products,” the contract states. “Or bonus can be cashed out according to company policy. [Investors] can sell or trade units according to company policy, or trade for amber products.”
Chen and USFIA employees have not responded to repeated requests for comment.
David Arvizu – a vocal critic of Wuo and resident of the Highlands who is spearheading a lawsuit against the council aimed at preventing two construction projects in the north Arcadia neighborhood – played an active role in organizing the Gemcoin investors’ appearance at the council meeting and coordinating recent press conferences.
Arvizu said during the meeting that investors approached him hoping that he could help them get the attention of Arcadia officials and law enforcement authorities.
Council Member Sho Tay confirmed he referred Gemcoin investors to Arvizu after they sought Tay’s help earlier this summer.
“I don’t know how to help them because I’m [not involved] with Gemcoin, but they asked me,” Tay said in an interview. “Before then, [Arvizu] was showing a lot of pictures about Gemcoin and I said ‘whoa, talk to this guy.'”
Arvizu has discussed Gemcoin at council meetings since Arcadia Weekly reported July 1 on Wuo’s ties to the virtual currency.
Two outspoken Gemcoin critics, Jason Ning and Michael Liu, did not attend the council meeting after allegedly receiving death threats over the phone on Monday night, Zig Jiong of the Chinese American Equalization Association said in an interview.
The association has also played a significant role in organizing recent protests against USFIA and mustering disgruntled Gemcoin investors.
While most of the people who addressed the council about Gemcoin chastised Wuo for his involvement with USFIA and attempts to downplay his prominent role in the cryptocurrency’s marketing strategy, former Arcadia Council Member Floretta Lauber defended the embattled councilman.
“I’ve known John Wuo for 40 years,” Lauber said, noting his extensive ties to the community.
“I have never known him to do anything dishonest,” Lauber said. “I don’t know why he’s being persecuted.”
She went on to opine that criticism about Wuo’s Gemcoin involvement stems from political opponents who are upset about his stance on mansionization and property rights.
Former council candidate Burton Brink and other residents lambasted Wuo for his Gemcoin ties. Several called for Wuo to resign from public office.
“Mr. Wuo tried to whitewash his involvement in this scam,” said Shone Wang. “There’s no mea culpa moment here.”
The Gemcoin controversy “has already cast a big cloud over our Arcadia, and our reputation has been deeply, seriously damaged,” Wang added. “I urge Mr. John Wuo to step down if he has one ounce of decency in him.”
On Wednesday San Gabriel-based attorney Long Liu, who has been in contact with disgruntled Gemcoin investors, said he intends to file a class action lawsuit against Wuo, Chen and others connected with USFIA and the U.S. China Consultation Association, which Gemcoin marketing material has described as another Arcadia entity tied to the cryptocurrency.