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Two Baysiders convicted of Flushing bank fraud

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In 1990 Bayside resident...

By Chris Fuchs

Four founders of an Asian bank in Flushing were convicted last Thursday of siphoning off funds from a $1 million lease agreement on the bank’s Main Street headquarters, the U.S. attorney’s office in Brooklyn said Friday.

In 1990 Bayside resident Joseph Liu, the father of current city council candidate John Liu, and his three partners established the Great Eastern Bank and entered into a 30-year lease with a real estate partnership. The four founders and six others, who were not charged in the case, set up the partnership.

The bank paid the partnership, known as the Seven Giants, $1 million for property on Main Street in Flushing, of which the four defendants and six other bank directors each received $100,000, prosecutors said.

It was unclear why the other six individuals were not charged in the indictment.

The four founders were convicted last Thursday in Brooklyn federal court of three counts of misapplication of bank funds, false entries in bank records and conspiracy to commit these offenses, prosecutors said.

In addition to Joseph Liu, who is president of Great Eastern Bank, the other three member found guilty were former bank directors: Lung Fong Chen of Flushing, former member of the Flushing Council on the Arts; Wen Y. Chen of Bayside; and Schuman Tu, a Whitestone resident.

Each faces up to 30 years in prison and a fine of $1 million on the charges other than conspiracy, when sentenced by Judge Edward Korman. The conviction of conspiracy carries a sentence of up to five years in prison and a fine of $250,000. A sentencing date had not been set as of presstime.

Liu and Tu did not return messages left on their answering machines Monday night. The other two defendants could not be reached for comment by Tuesday night.

In the fall of 1984, according to the indictment, seven individuals, including the four defendants, formed the Seven Giants partnership to develop a building to be used as the headquarters of the Great Eastern Bank. A few months later in 1985, Chen, who served as the bank’s attorney, and Tu bought the property at 41-74 Main St., the bank’s current location, to build a commercial condominium to house both retail and office space, the indictment said.

That year Chen and Tu gave Seven Giants the rights to build the bank’s headquarters and Seven Giants agreed to pay all costs born out of the construction, a project that was finished four years later, the indictment said. The Great Eastern Bank moved in during the winter of 1989.

On Jan. 12, 1990, the indictment said, the bank’s directors, including the four defendants, approved a 30-year lease between the bank and Seven Giants, in which the bank agreed to pay an annual rent of $310,000 for the first and second years, with increases in the third. If Seven Giants decided to sell the property, however, the bank had right of first refusal, the indictment said.

That same day, the indictment said, the directors also approved a separate, untitled agreement for an additional $1 million payment to be made to Seven Giants for leasehold improvements, a 30-year lease instead of the 10-year lease originally offered, and the right of first refusal.

Prosecutors contended the founders made false entries in books, reports and bank statements about why the $1 million was paid to Seven Giants by the bank and misappropriated the funds, according to the indictment

Reach reporter Chris Fuchs by e-mail at Timesledgr@aol.com or call 229-0300, Ext. 156.

Posted 7:03 pm, October 10, 2011
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