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A California man faces a federal indictment in connection with the theft of nearly $2 million from Appalachian State University.
Ho Shin Lee, 31, of Los Angeles, is accused of laundering $1.9 million stolen from the Boone university in a billing fraud scam. He was charged with 14 counts of money laundering, with each count carrying a maximum penalty of 20 years in prison and a $500,000 fine. The indictment against Lee was unsealed following his arrest in California. The FBI investigated the case.
Federal officials for the U.S. Attorney’s Office for the Western District of North Carolina said Lee registered a corporation in California called Royce Hub Trading, opened a bank account in the corporation’s name as the sole account holder and transferred the money stolen from the university into that account.
Court documents referenced in a press release from the U.S. Attorney’s Office said that in 2016 Appalachian State University awarded a construction contract for a new building on campus to Rodgers Builders, a legitimate construction firm based in Charlotte. In December 2016, a university employee received an email from an individual claiming to be a representative of Rodgers Builders with instructions to change the direct deposit information for the company to the Royce Hub Trading account newly opened by Lee. The fraudsters used an email address nearly identical to one used by Rodgers Builders and posed as a high-ranking employee of the company when asking the university to change the direct deposit information.
The university employee complied with the request and, in early December 2016, a payment of more than $1.9 million meant for Rodgers Builders was deposited into the Royce Hub Trading account. University officials discovered the fraud when a representative of Rodgers Builders contacted ASU to inquire about a missed payment.
Authorities said Lee quickly moved that payment out of the Royce Hub Trading account through a series of financial transactions, in an effort to conceal the fraud.
Federal officials announced in January that more than $1.5 million stolen in the scam had been recovered and returned to the university.
Megan Hayes, director of University Communications at Appalachian State, told Carolina Public Press at the time of the asset recovery announcement that the university was grateful to federal authorities for their efforts.
“We are very appreciative of the work by the U.S. Attorney’s Office and Federal Bureau of Investigation to seize and recover the university’s funds,” Hayes said. “In addition to implementing more stringent policies to increase vigilance in the face of rising rates of cyber crime, we will continue our efforts to recover the remainder of the lost funds.”
U.S. District Attorney R. Andrew Murray said at the time of the asset recovery announcement that recovering the money stolen from ASU had been a priority for his office.
“Today’s announcement is an example of the results we get when we use civil forfeiture laws to swiftly stop crime and provide financial relief to victims of fraud,” Murray said.
“In this case, the FBI located and seized the stolen funds even before criminal investigative targets had been identified or a criminal case had been filed. Under these circumstances, civil forfeiture is the only area of law that enables law enforcement to swiftly obtain warrants to secure stolen funds, and to prevent the perpetrators of fraud from accessing them.
“Identifying and seizing ill-gotten gains and returning forfeited funds to victims is a priority for my office. I will use all of the tools at my disposal to make victims whole, and civil asset forfeiture is an invaluable tool in that arsenal.”