On the same day that the Warriors and Lakers began an iconic playoff series this week, federal agents arrested an East Bay man for running a $39 million Ponzi scheme involving prime tickets and luxury suites in Chase Center in San Francisco, the Staples Center in Los Angeles and Oracle Arena in Oakland.
U.S. Attorney Ismail J. Ramsey announced Monday the arrest of Derek Vincent Chu, 41, of Alamo, on an April 26 indictment by a federal grand jury for crimes related to an alleged seven-year, $39 million Ponzi scheme involving over 100 victims.
According to the indictment, between late 2013 and 2020, Chu used several companies to raise $39 million by fraudulently soliciting investments in the purchase and resale of professional basketball tickets and luxury suites for Warriors and Lakers basketball games. The indictment further alleges that Chu induced investors by making numerous materially false misrepresentations, including how the investor funds would be used, how investors would be repaid and whether the investments were secured by collateral.
According to the indictment, Chu commingled the investors’ money between his own personal accounts and his companies’ accounts, which resulted in investor money being used to repay other earlier investors and for other unrelated expenses.
The indictment said Chu misappropriated and diverted more than $7.3 million of investor funds for his own personal benefit, which included paying credit card debts; making cash withdrawals; paying for travel, luxury automobile and jewelry purchases; and paying utilities bills, among other things.
The indictment charges Chu with eight counts of wire fraud and three counts of money laundering.
After his arrest Monday morning, Chu made an initial appearance before the U.S. Magistrate Laurel Beeler in U.S. District Court in San Francisco. He is to return with his lawyer on May 10.
The prosecution is the result of an investigation by the Internal Revenue Service – Criminal Investigation, the Federal Bureau of Investigation and the San Francisco Police Department.
Individuals who believe that they may be a victim in this case should contact the United States Attorney’s Office for the Northern District of California’s victim specialists via email.