Seattle bank accused in massive Ponzi scheme

By LEVI PULKKINEN
SEATTLEPI.COM STAFF

The CEO and board of a Seattle-based bank have been accused of taking part in a scheme that defrauded thousands of Indonesian investors out of $175 million, according to a civil filing earlier this month in federal court.

Attorneys for the investors say Jesse Tam, president and CEO of Regal Financial Bank, founded the bank in 2001 using, in part, money garnered through the now-defunct firm Dressel Investments Ltd. Dressel remained one of the bank’s biggest customers at least until 2006, the attorneys argue, when the alleged Ponzi scheme began to collapse.

Tam and the bank’s board of directors were named as defendants in a lawsuit filed April 17 in U.S. District Court in Seattle on behalf of the 4,200 Indonesians who lost money after investing in Dressel. The suit is part of an international effort to recover some of the money lost by aspiring Indonesian investors.

Craig Weiner, a New York attorney involved in the effort, said most of the investors involved were middle-class Indonesians unfamiliar with investments. On hearing that Dressel promised high-percentage returns, many invested their life savings in the firm.

“They made investments, and they lost all their money on it,” Weiner said in an interview. “It’s bad enough when Americans get defrauded, but when citizens of a developing nation get defrauded, I’d say it’s even worse.”

Weiner said he is not aware of any criminal charges filed in the United States against those involved with Dressel. A search of state and federal records did not reveal any active cases. Calls to Regal Financial Bank were not returned.

According to the complaint, Danny Wong of North Carolina, Donald Sherer of Utah and others began raising funds for Dressel Investments in 2001. On several trips to Indonesia, directors of the firm told would-be investors their money would be placed in investment funds delivering returns of 24 to 28 percent.

During the six years that followed, nearly all of the at least $300 million taken in by the company was used to repay other investors, attorneys for the Indonesians contend. About $30 million was either diverted to the company’s directors or invested in projects owned by those involved in Dressel.

With the money, Dressel Investments directors purchased helicopters, personal cars and homes, the attorneys assert. Among the company’s investments were an Alaskan gold mine owned by one of Dressel’s directors and a seaweed-processing facility in the Pacific island kingdom of Tonga operated by Wong.

In late 2006, the Indonesian firm managing investments with Dressel found that it could not redeem any of its investments, the attorneys said in court documents. Since then, three employees at the firm have been convicted in Indonesia and sentenced to prison terms ranging from eight to 13 years.

An Interpol arrest warrant has also been issued for Wong, according to the complaint.

Through the suit, attorneys for the investors claim that Regal Financial Bank’s Tam traveled to Indonesia with Wong, who they allege owned nearly $1 million in bank stock. They also allege that some funds Wong had garnered through the scam were used to start the bank, which has offices in Seattle and Kent.

“Danny Wong, the Dresssel entities and affiliates had to have been among the most important customers, if not the most important customers, of Regal Financial Bancorp and Regal Financial Bank,” Seattle attorney Matthew Turetsky said in the complaint. Tam, he added, “had full and complete knowledge that Danny Wong and the Dressel entities were operating the Ponzi scheme.”

None of the 19 individuals or companies named in the complaint has yet filed formal responses with the court. The plaintiffs have requested $175 million in damages, in addition to any interest or attorneys fees to be determined at trial.

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