Arcadia Gem Coin Saga: Steve Chen Pleads Guilty in $147M Mining and Digital Currency Fraud

Gem Coin

Former Gem Coin employees were forced to leave the building when the Feds raided the Arcadia Facility in 2015. – File photo by Terry Miller / Beacon Media News

By Terry Miller

One of Arcadia’s largest financial scandals in 2015 involved crypto currency and a host of well-known public officials, including a former Arcadia mayor for involvement in a Ponzi scheme that ultimately shut down the operations of the shady Arcadia business known as U.S. Fine Investment Arts, Inc. (USFIA).

The business was raided by federal authorities in 2015.

Arcadia-based Gem Coin owner agreed to plead guilty to federal criminal charges that he falsely promised profits to more than 70,000 victim investors worldwide in a scheme where a multinational company issued a sham digital currency purportedly asset-backed by billions of dollars’ worth of amber and other precious gemstones.

Steve Chen, 62, a.k.a. “Li Chen” and “Boss,” agreed to plead guilty to one count of conspiracy to commit wire fraud and one count of tax evasion. The criminal information and plea agreement in this case was filed late Tuesday in United States District Court, and Chen is scheduled to make his first court appearance in this case on March 10.

In 2015 Gem Coin investors named former Arcadia Mayor John Wuo as being involved in the Ponzi scheme. The story was first broken by Arcadia Weekly reporter Joe Taglieri early 2015.

A group of more than 20 dismayed Gem Coin investors and their supporters attended an Arcadia City Council meeting in 2015 demanding answers from then Councilmember Wuo on his involvement with the controversial investment product and what to do about getting their money back.

John Wuo, who still lives in Arcadia according to sources, was forced to vacate his position on the dais due to his alleged connections to the Gemcoin Ponzi scheme. – File photo by Terry Miller / Beacon Media News

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 Gem Coin stakeholders.

“I want to get an explanation from John Wuo,” Gem Coin 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 Gem Coin 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 Gem Coin 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.”

Wuo has on numerous occasions publicly denied he had a financial stake in the cryptocurrency controlled by Arcadia-based entrepreneur Chen’s USFIA Inc. and Alliance Financial Group. Wuo also downplayed his level of association with Chen despite a stream of evidence linking the two.

Wuo kept a very low profile and ultimately resigned from council after massive public pressure and investigative reporting by Taglieri.

Additionally EB-5 Visas (high-priced Green Cards for investors) were purportedly connected with Chen’s operations.

A document obtained by Arcadia Weekly showed 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.”

Amid the escalating controversy, Wuo resigned “due to personal and health reasons,” then Mayor Gary Kovacic announced at during early October 2015.

After 12 years of council service and three mayoral terms, Wuo unexpectedly vacated his post in 2015 via a letter.

According to his plea agreement, Chen was the owner and chief executive officer of U.S. USFIA, and six other companies that used the same Arcadia address. From July 2013 until September 2015, Chen fraudulently promoted and solicited USFIA investments, and he ultimately obtained approximately $147 million from victim-investors.

Chen admitted in his plea agreement that he falsely promoted USFIA as a successful multi-level marketing company that extracted amber and other gemstones from non-existent mines it “owned” in the United States, the Dominican Republic, Argentina and Mexico. Investors were duped into buying USFIA investments in amounts ranging between $1,000 and $30,000 each, court documents state. These “packages” purportedly were comprised of amber and other gemstones, as well USFIA “points,” which could be converted to USFIA shares when the company had its IPO in the near future. Chen admitted that he never intended for USFIA to have an IPO.

USFIA also offered other bonuses — including cash, travel, luxury cars, homes in the Los Angeles area, and EB-5 visas for immigrant investors — to investors who recruited other people to purchase these “packages,” Chen admitted.

Beginning in September 2014, Chen and others altered the promotion by substituting quantities of “Gem Coins” instead of points. They falsely promoted these “coins” as a legitimate digital currency backed by the company’s gemstone holdings. Chen also falsely represented that these “coins” already were in wide circulation in the jewelry and finance industries.

Chen also admitted that the company did not generate any significant revenue from its business operations, apart from sales of investment packages to victim-investors. The amber and other gemstones provided in the investment packages — including those displayed at USFIA’s Arcadia headquarters — were obtained from domestic and foreign commercial suppliers, assigned grossly inflated prices, and worth much less than what investors paid USFIA for them. Chen admitted that “Gem Coins” had no circulation in any industry, were not accepted by any merchants, and had no economic value.

“Mr. Chen’s promises to investors were as worthless as his non-existent mines and phony digital currency,” said U.S. Attorney Nick Hanna. “This case should remind all investors that trappings of success may convey legitimacy, but everyone should exercise extreme care when considering giving hard-earned money to any outfit promoting trendy products and extravagant profits.”

“Mr. Chen lured victim investors around the globe by creating a mirage made of fashionable cryptocurrency features and dynamic marketing tactics,” said Paul Delacourt, the assistant director in charge of the FBI’s Los Angeles Field Office. “The investing public should be aware that cryptocurrency schemes are more prevalent and more sophisticated than ever, but those who perpetrate them use the same tactics as con-artists always have — by convincing investors to risk their money in the bank based on false promises of imminent wealth.”

Chen also admitted to attempting to evade payment of federal income taxes. He reported gross income for 2014 was $138,015, when in fact his income for that year was approximately $4,816,193, upon which Chen owed $1,885,094 — before interest and penalties.

Once he pleads guilty, Chen will face a statutory maximum sentence of 10 years in federal prison.

“Steven Chen defrauded thousands of victims in order to fund his extravagant lifestyle. Chen funneled $4,816,193 of his ill-gotten gains to purchase homes and fund his gambling habit. Chen’s criminal activity did not stop with stealing from his victims. Chen also defrauded the government of $1,885,094 in taxes. IRS-CI used its financial investigative expertise and critical law enforcement partnerships to untangle the web created by Chen and bring him to justice,” said Ryan L. Korner, special agent in charge.

Leonard Stacy Johnson, 53, of Huntington Beach, who worked at Chen’s direction in promoting USFIA and Gem Coins, pleaded guilty in July 2019 to one count of tax evasion and one count of making a false statement on an immigration document. Johnson is scheduled to be sentenced on June 22.

The Securities and Exchange Commission successfully brought an enforcement action against Chen, USFIA, and 12 other Chen-controlled entities.  A receiver has been appointed by a court in that matter, and maintains a website for victims at:

This matter was investigated by the FBI, IRS-Criminal Investigation, and Homeland Security Investigations.

This case is being prosecuted by Assistant U.S. Attorneys Richard E. Robinson and Katherine A. Rykken of the Major Frauds Section.

February 21, 2020

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