Monday, March 23, 2009
Get-poor-quick schemes and the Korean-American community
One summer vacation about ten years ago, an "uncle" (not a biological relative but a close family friend) asked me to join him in Olive Garden to meet with one Mr Chang, whom my uncle had met at the local Korean-operated golf driving range, to discuss a proposed business arrangement. My uncle trusts my ability to get a read on people, and he also thought there was a chance that (a) I'd want to get involved in said deal and (b) I could meet Mr Chang's attractive niece. I went along, because of (b) and (c) a free meal at Olive Garden (which Korea does not have).
It was clear to me that Mr Chang was a sneaky character. Among other things, he didn't give solid information and he had what were, to me, vague and sometimes inconsistent numbers about what he had as assets, though his plans sounded okay. He was also very nŭkkihae (느끼해). I politely bowed out of any involvement in Mr Chang's schemes, citing how busy I already was, and later, in private, I told my uncle that I didn't not get a good vibe at all from Mr Chang.
I did meet the niece, nonetheless, but she was already involved with someone whom her uncle did not know about. She had her own business plans, which sounded quite ambitious but not dishonest, and she asked if I was interested in getting involved. About her uncle she said this: "Your uncle should not go into business with my uncle."
He did anyway, and a few years later he would admit to me that he had done a lot of things for Mr Chang but had stopped seeing any money. It was time and opportunity — and face — that he'd lost, but not his nest egg. The last my uncle knows about Mr Chang is that no one at the golf course has seen him in a couple years and he heard something about Russians looking for him.
An alleged Ponzi scheme reported in the Orange County Register reminded me of Mr Chang. A Korean-American businessman promising guaranteed returns to other Korean-Americans is now facing a lawsuit after he just stopped making the returns. He had a nice office in Irvine, something that is really not that hard to set up. People knew him from the community, something not all that hard to arrange either.
The whole thing smacks of "Matchstick Men," a movie about elaborate cons starring Nicholas Cage and Sam Rockwell. In some ways, our own greed blinds us to the inherent dangers of trusting other people with our money, and the Ponzi scheme operators know that. They capitalize on it, literally. After watching that film, I don't think I could trust anyone who comes to me with a "really good investment" idea that I'd never heard of before.
When I was a kid, my dad had taken a large amount of the family's savings to invest in a cattle venture. There really were cattle and they really were on land. But when the folks milking the investors got enough money, they walked away with all the cash, leaving the cattle to starve to death. I don't think my dad invested in anything after that. Except a house in Orange County and a 401K.