EXCLUSIVE: $39M Ponzi scheme victims detail how they lost their SF home, thousands of dollars

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Saturday, May 6, 2023
EXCLUSIVE: $39M Ponzi scheme victims detail how they lost their home
Derek Chu is accused of defrauding victims in a $39 million Ponzi scheme that promised returns from the resale of Warriors tickets, and luxury suites.

SAN FRANCISCO (KGO) -- For the first time, we're hearing from one of the victims targeted in a $39 million Ponzi scheme, allegedly orchestrated by an East Bay man.

In many of those cases, victims say they were scammed out of not only hundreds of thousands of dollars - but their homes. The U.S. Department of Justice alleges that 41-year-old Derek Chu targeted over a hundred victims.

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Attorneys for some of those victims say this might be just the tip of the iceberg.

"You feel ashamed, you feel violated, you feel embarrassed. You feel afraid," said Kingsley, who requested we only use his nickname. He and his 76-year-old mother Ellen, who is also using a pseudonym for safety concerns, have been trying to get justice for seven years after Ellen was allegedly defrauded out of a house.

Ellen was a close friend of Derek Chu's father, Felix.

"He's a family friend for close to 30 years," said Kingsley, who described Felix Chu as seemingly "honest" and a person "my mom trusted so much, he had Felix deliver a eulogy at my dad's funeral."

Kingsley says Felix was well-connected in the Chinatown community and his mom, would give him and his son Derek small amounts of money with the promise of a significant return.

"It starts off as several thousand. Then it goes up to a hundred thousand," said Kingsley.

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As the returns came in, Ellen's trust grew.

"Then those investments started getting higher and higher and he kept asking for more," said Kingsley. "Then it starts involving sales of property to take it above a million."

Eventually, Ellen signed over her San Francisco home.

"She realized it was all a lie and she felt truly, truly ashamed by it. It broke my heart because it looked like her soul wasn't there at the time," said Kingsley.

The DOJ alleges Derek Chu's Ponzi scheme began in 2013. He allegedly solicited investments with the promise of returns from the resale of Warriors tickets and luxury suites at Oracle and the Chase Center.

Jaynry Mak and John Chow have filed multiple lawsuits from more than a dozen people who believe the Chu father-and-son duo worked as a team.

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Mak showed a stack of copied promissory notes victims say they were given by the Chus.

"This one is a hundred thousand. You get 18% interest, so you get $1,500 a month," said Mak.

Mak and Chow say much of the fraud started by targeting a certain demographic.

"We believe the first round is Chinese, monolingual seniors. Because many of these victims are seniors they went through emotional abuse from this. Some were suicidal," said Mak.

In one instance, Mak said one family was told to cash out their retirement savings. Another family was unable to send their two children to college.

According to charging documents, Derek Chu is accused of misappropriating $7.3 million on "luxury cars, jewelry and credit card debts." So while Mak and Chow are not certain victims will ever be made whole again, they believe the attention the case is now garnering is an encouraging start.

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"Now that there's steam we want to continue this," said Chow.

Kingsley hopes his mother's story will inspire others to come forward.

"If you don't report it, whatever happened to Derek Chu several days ago won't happen. Stop being afraid, it's these guys' turn to be afraid," said Kingsley.

Mak echoed that sentiment: "If there are other victims out there, we encourage them to speak up."

ABC7 News has reached out to the DOJ to inquire if charges would be coming for Chu's father, Felix, however, we have not heard back yet.

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Derek Chu faces a sentence of decades behind bars and a maximum fine in the millions. His next court appearance is May 9.