NEWARK – The president of a purported textile wholesale distributor headquartered in Hackensack was arrested at home early this morning by special agents of the FBI and the U.S. Treasury Department for allegedly defrauding investors in the United States and the People’s Republic of China (PRC) of more than $10 million in investment fraud schemes, New Jersey U.S. Attorney Paul J. Fishman announced.
Sara Rong Liu, 52, of Mahwah is charged by complaint with one count of wire fraud. She is expected to appear this afternoon before U.S. Magistrate Judge Michael A. Hammer in Newark federal court.
According to the complaint unsealed today:
Liu is the president of Westone Inc., a company purportedly involved in the wholesale distribution of textiles as well as interior design. From approximately October 2010 through October 2013, Liu is accused of falsely representing to victim investors, among other things, that Westone had been awarded a lucrative $156.6 million contract by the New York City Department of Design and Construction Fund (NYC DDC).
The NYC DDC never awarded the defendant or her company any such contract.
In 2011, Liu allegedly told investors there was a problem with the contract that required Westone to pay certain fees before the NYC DDC would release contract payments to the defendant and her company.
To support her false claims, Liu allegedly created, or caused to be created, a number of fictitious contracts, emails and other documents, including documents purportedly from, among others: the NYC DDC, which stated she had been awarded the contract to provide “Design, Construction, and Construction Support Services for the Design, Manufacture, and Supply of Good Quality Home & Office Interior Textile Products and Finishing” in and around the New York metropolitan area; the Federal Reserve Bank of New York; the Treasury Department; the FBI; and the U.S. Attorney’s Office for the Southern District of New York, among others. Liu allegedly emailed a number of these documents to the victim investors from whom she solicited funds. She allegedly characterized the funds as short-term loans, which would be repaid immediately upon the release of the first contract payment of $52.2 million from the NYC DDC.
Investors gave Liu millions. Between approximately October 2010 and February 2012, Liu obtained approximately $530,000 from a single investor located in Virginia. The victim wired most of that money into an account controlled by the defendant in New Jersey.
In another alleged scheme, Liu is accused of telling victim investors that she stood to receive more than $17 million from a deceased uncle’s estate in the PRC, but first had to pay taxes related to her uncle’s estate before she could receive the money. Liu allegedly represented to investors that if they helped her to pay the taxes, she would share the inheritance with them.
In all, the defendant allegedly obtained more than approximately $10 million in illegitimate proceeds from victim investors located both in the United States and the PRC.
The wire fraud count carries a maximum potential penalty of 20 years in prison and a $250,000 fine, or twice the gain or loss resulting from the crime.
Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford in Newark, and the United States Treasury Department, Office of the Treasury Inspector General for Tax Administration, under the direction of Special Agent in Charge Robert Geary, Washington Field Division, with the investigation leading to the arrest and charges.
The government is represented by Deputy Chief Gurbir Grewal and Assistant U.S. Attorney Aaron Mendelsohn of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
The charges and allegations contained in the complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.
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