SAN JOSE -- Federal prosecutors are urging a judge to sentence a former Silicon Valley hedge fund manager to nearly 20 years in prison for defrauding local investors out of millions of dollars by luring them into an international scheme with phony promises of backing from prominent law firms and auditors.
U.S. District Judge Ronald Whyte on Monday is scheduled to sentence Albert Ke-Jung Hu for his conviction on seven counts of wire fraud in connection with the scam, which federal prosecutors say cost investors, particularly from the Chinese community, at least $6.5 million.
Under federal sentencing guidelines, Hu could serve between 19 and a half and 24 years in prison. In court papers, Assistant U.S. Attorneys Joseph Fazioli and Timothy Lucey endorse the probation department's recommendation of 19 and a half years, arguing the stiff sentence is needed to send a message to the "public that investment fraud 'does not pay.' "
"Albert Hu's conduct demonstrates a pattern of brazen and deliberate deception," the government wrote. "(He) stole over $6.5 million from numerous victims, then squandered the money in part on personal items and other noninvestment expenditures."
Hu's lawyers, meanwhile, urged the judge to show leniency, describing him as a "productive and contributing member of society" who has "learned his lesson." In court papers filed on Friday, Jerry Fong, Hu's attorney, asked for a five-year prison term, calling the government's
"A person committing manslaughter would receive a significantly lower sentence than the one sought against Mr. Hu," his attorneys wrote.
A federal jury in June convicted Hu of the fraud charges, siding with prosecutors who argued he orchestrated the scheme over a seven-year period through several Sunnyvale-based hedge funds. Prosecutors alleged Hu enlisted well-heeled clients by assuring them his hedge funds, Asenqua Beta Fund and Fireside LS Fund, were affiliated with reputable lawyers and auditors and promising investment returns of 20 to 30 percent.
Law enforcement officials arrested Hu in Hong Kong in 2009, after he skipped the country to avoid capture. The U.S. Securities and Exchange Commission also filed civil fraud charges against him.
In addition to the prison sentence, prosecutors are asking the judge to order Hu to pay $6.5 million in restitution to his victims.
Hu, while awaiting sentencing in the Santa Clara County Jail, has been working with a fellow engineer to establish a foundation for a high-tech company to develop solar energy equipment, according to court papers filed on his behalf.
Howard Mintz covers legal affairs. Contact him at 408-286-0236 or follow him at Twitter.com/hmintz.