Two Women Charged For Scamming Victims Out of $8 Million in Ponzi Scheme

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SAN JOSE — Two women have been charged in Santa Clara County Superior Court with running an investment fraud that swindled mostly Vietnamese-American victims out of $8 million over five years, a prosecutor said today.

Lananh Thi Phan, a licensed real estate broker in San Jose, and Diane H. Do Bui, a notary public, are charged with felony counts of grand theft and securities fraud and could face up to 24 years in prison, Deputy District Attorney Kimberly Connors said.

Phan, 54, and Bui, 49, were arrested on Wednesday, Connors said.

Both are being held in county jail in lieu of high bail amounts, Phan for $10 million and Bui for $5 million, because of the big losses victims suffered “and the fact it went on so long,” according to Connors.

“So, it’s appropriate to protect the public and our current victims,” she said.

The 18 people documented so far as victims are mostly Vietnamese-Americans living in the South Bay Area and the district attorney’s
office is still trying to locate others who may have been cheated as well, Connors said.

Phan, in her association as a licensed Realtor with San Jose-based Realty World-Quality Homes, Inc., worked with Bui to lure victims with promises of investing their funds in things like foreign gold, a bail bonds business and a “secret” venture, the prosecutor said.

Phan would tell her investors she could not reveal what the “secret” investment was because “if I did, you would do it and everyone would do it,” Connors said.

The alleged co-conspirators told victims that for an investment of at least $25,000 they would receive generous returns of $1,500 per month, she said.

After gaining their confidence by doling out a couple of payments, Phan and Bui would then convince the investors to invest more of their savings and roll their payments back into the business, telling them they would enjoy even higher returns, Connors said.

Almost all of the investors did not receive another payment from the defendants after the first couple of months, she said.

But as in a classic “Ponzi” scheme, the pair used earlier investors’ money, which was not invested in the promised way, to send checks to newer investors for the initial payments, Connors said.

The two ended up spending the $8 million they acquired from the fraud on themselves, she said.

Some victims told the district attorney’s office that Phan boasted about her success and showed them her collection of expensive Louis Vuitton purses, according to prosecutors.

Bui, as a commissioned notary public and escrow officer, would notarize documents she allegedly knew were false in order to post people’s homes as security and use the property to withdraw more money to further the Ponzi scheme, Connors said.

The district attorney’s office began its one-year investigation into the Ponzi scheme after a victim came forward to report about it and investigators learned victims had been believing in it for five years, she said.

The victims had assumed their funds were safe, like money sitting in a bank to be used for college educations for their children or for retirement, Connors said.

“It is the nature of a Ponzi scheme,” she said. “There are those initial payments and you just believe.”

(Copyright 2014, Bay City News, All rights reserved.)

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