Ex-President of Failed Bank Gets 5 Years for Selling Fake CDs
NEW YORK (AP) _ The former president of the failed Golden Pacific National Bank was sentenced to five years in prison Thursday for defrauding bank customers of $15 million through phony certificates of deposit.
Kuang Hsung J. Chuang, 48, of Staten Island was convicted Jan. 18 on 22 counts of making false statements to the Federal Reserve, misapplying bank funds and defrauding bank customers.
According to evidence at trial, Chuang, who was also chairman of the board, and the New York bank’s former vice president and cashier, Theresa Shieh, 37, of Queens, sold tens of millions of dollars in bogus certificates of deposit, called ″yellow certificates,″ between 1980 and 1985.
Sales of the yellow certificates, so named because they were printed on yellow paper, were kept off the bank’s books and hidden from federal regulators.
The certificates were not federally insured and were used to generate a multimillion dollar slush fund under Chaung and Ms. Shieh’s control, unlike genuine certificates of deposit.
On June 21, 1985, the federal comptroller of the currency declared Golden Pacific insolvent and placed it in receivership under the Federal Deposit Insurance Corp.
About $15 million in yellow certificate funds were due customers at the time. After a court battle, the FDIC has been treating the yellow certificates as insured deposits and has been reimbursing customers.
U.S. District Judge Miriam Goldman Cedarbaum is scheduled to sentence Ms. Shieh, who also was convicted, on June 12.