NEWARK (CN) – Korean-American brothers relied on connections with the Asian-American community to loot more than $5 million from their company, a shareholder claims in Federal Court.
After establishing themselves as trustworthy automated teller machine sellers to Korean-American and Chinese-American small business owners, Jae Hyung and Hang Yong Park solicited more than $5 million from 30 investors, according to the complaint.
Hyo Park claims she invested $250,000 in Inextnet, which was to develop software so the company could sell public wireless Internet connections.
Defendants Jae Hyung and Hang Yong gave their mother, Young Sook Yang, 35 percent interest in Inextnet though she did not really manage the company, according to the complaint.
Park says that nonmanaging members contributed $1.125 million in capital while the brothers contributed nothing, failed to keep records and siphoned corporate funds to create other businesses.
Inextnet was allegedly in the final negotiations of a deal that would create “multifold returns,” but the company never developed the wireless equipment and failed to close contracts, according to the complaint.
Without investor authorization, Park says Inextnet acquired Nextran and converted all of the company’s shares.
Park says she invested another $150,000 in Nextran, which provided remote ATM management services, after the defendants falsely claimed the company would receive backing from Lehman Brothers Holding and submit an initial public offering.
Nextran promised high returns and said it was in the final stages of new contracts, but Park says she never received dividends and the defendants converted all of the assets to a nonparty for $2.5 million.
After Nextran used its ATMs to intercept Citibank customers’ personal financial information, the company lost its sponsorship from Palm Desert National Bank, according to the complaint. Park says Palm is suing Nextran for $1.9 million, which it paid to settle a Citibank lawsuit.
Park accuses the Park brothers, their mother, and the companies’ officers of securities fraud, breach of fiduciary duty and corporate waste. She is represented by Iris Fein Fein & Jakab.