California Department of Corporations Charges Citi Travelers Insurance Management and Robin Kyu Cho with Defrauding Korean American Clients of More Than $2.5 Million.

SACRAMENTO, Calif. -- The California Department of Corporations (Corporations) announced a desist-and-refrain order has been issued to Citi Travelers Insurance Management, a.k.a. Citi Travelers Scholarship Management, and the company owner Robin Kyu Cho, for engaging in a investment scheme by which the defendant defrauded at least 19 Korean American community members of approximately $2.5 million.

From 1998 through December 2002, Corporations alleges that Cho solicited financially unsophisticated friends, along with their family members and their friends, to invest in his illegal scheme. The investment was not reviewed and approved by Corporations as required by state law.

Cho and his companies were ordered by Corporations to stop selling securities investments and making misrepresentations. Cho misled investors by guaranteeing the return of investors' initial investment at the end of the payment period upon request. In addition, he falsely claimed he was a stockbroker, and declared the investment consisting of stocks, bonds and commodities would yield a 4 to 6 percent monthly return.

Corporations claims that clients were not informed that they were investing in a Ponzi scheme: a type of illegal pyramid scheme where money from new investors is used to pay off earlier investors until the whole scheme collapses.

Investors were not informed that Cho was investing their pooled money in financially risky commodity futures, or that he had been losing his own funds since February 1996 and investors' funds from 1998 through September 2002.

"Exploiting the trust and friendship among members within your own community is deplorable and will not be tolerated," said acting Corporations Commissioner Wayne Strumpfer. "Schemers should be aware we're on the alert for this type of scam."

The Department of Corporations is California's investment and financing authority and is responsible for the regulation, enforcement, and licensing of securities, franchises, off-exchange commodities, investment and financial services, independent escrows, consumer and commercial finance lending, residential mortgage lending, and payday lenders. Contact our toll-free consumer resource center at 1-866-ASK-CORP (275-2677) for information or to obtain a consumer complaint form. Please visit Corporations' Web site at www.corp.ca.gov.