Sentencing coming where cultures clash

Kwi Choi Yi doesn't fit the stereotype of a criminal facing prison for stealing from his friends.

The felony theft charges to which Yi pleaded guilty don't involve drugs, violence or other elements that typically get people thrown in the slammer. Instead, prosecutors say, Yi kept hundreds of thousands of dollars other people of Korean descent voluntarily gave him as part of their participation in an informal banking club called a kye.

Pronounced "kay," the clubs are common in Korean culture, where they're viewed as an alternative to the rigors of getting a bank loan.

A kye involves a degree of trust among participants that would seem naïve to most Westerners. While members generally pay $1,000 per month for 21 months, they don't sign contracts, have no rules members must agree to, and some participants keep sketchy records of payments. There's also disagreement over what happens when some members get loans from the kye and disappear before paying them back, which is part of what happened with Yi, and what led to his trouble with the law.

The way kyes are organized created unusual challenges for the criminal justice system when members contacted authorities starting January 2004. More than 17 people reported Yi had not paid back money they invested in kyes he led, and some alleged he used the money for his expenses. But during court hearings to determine Yi's punishment, some victims offered vague and shifting allegations about the money they claim Yi owes.

In one case, defense attorney Will Cook pressed kye member Un Hon Ha, who had given varying accounts of the money Yi owed him.

"Mr. Ha, it sounds like you don't really know what you're talking about, or what money was for what, or where it came from, is that correct?" Cook said.

Ha responded through a court interpreter: "It's been five years, so it's possible I'm confused," he said. "I don't remember because it's been five years. I can't possibly remember everything."

The exchange illustrates a disconnect between the way kyes are run and the U.S. legal system.

"It's a clash of different cultures because there are no set-down rules. There was nothing signed in writing that if this happens this is the contingency plan, or if this person doesn't pay - it's just this kind of honor code," Cook said later. "I think there is a clash of culture, and Mr. Yi's caught in the middle of it."

Still, prosecutors think Yi used his leadership of at least two kyes to extract as much as $440,000 from participants, which he refused to pay back.

Linda Dix, an investigator for the District Attorney's Office, wrote in an affidavit supporting Yi's arrest that Yi used "money received from kyes for his personal benefit and created a Ponzi scheme of collecting money from new kyes to pay past kyes." Yi acknowledged owing some kye members when he listed them as creditors in his 2003 bankruptcy, Dix said.

Yi pleaded guilty to felony theft on July 9, 2007, a decision he said he regrets and blames on advice from his former lawyer. He tried to withdraw the plea, but the judge wouldn't allow it. Yi's final sentencing hearing is May 27, where he faces punishment from probation to six years in prison.

Aside from prison time, the case could create other problems for Yi.

He's a legal permanent resident in the country, not a citizen. A felony conviction will prompt immigration authorities to start deportation proceedings against him.

Yi, 51, arrived in Colorado Springs from South Korea with his family in 1979. The family's only assets were a $20 bill and a strong work ethic, he said. Yi spent years working long hours in a sewing factory, washing dishes and cleaning offices at night. In the 1980s, he married and started a dry cleaning business.

By the mid-1990s, Yi was financially successful and respected in the city's Korean community, he said. He was respected enough that other Koreans asked him to lead a kye in 1996. He said he did it to help other Koreans who wanted to invest money or get loans. Many of the kye members were friends, he said.

A kye generally has 21 members, including the leader. Each member pays a set amount per month, usually $1,000. Each month, members bid to receive the collection of money, and the person who promises to repay the club at the highest interest rate receives the collection, essentially a loan.

Yi's brother, Kay Yi, claims there's "no interest involved" in a kye. That's contrary to accounts offered by people who complained to the authorities that Yi didn't give their money back, or gave only partial repayment.

Colorado Springs resident Susie Kyung Jung, for example, claimed she gave Yi $10,607 as part of her participation in a kye from August 2002 to September 2003 and expected to get $200 in interest with the repayment. Jung said Yi gave her a check for $10,800, but when she tried to cash it there were insufficient funds in the account.

Other victims gave similar accounts.

Yi said the problem was some members of the kye got their loans and then quit making payments, and disappeared. He said the rules of a kye call for remaining members to cover the shortfall when that happens. Other kye members testified in court that Yi, as the leader, was supposed to use his money to cover the shortfall.

Kyes began hundreds of years ago when Korean farmers pooled resources to buy farm equipment, said Jung Hee Kwon, an editorial writer for The Korea Times based in Los Angeles. Kyes remain popular in Korea and among expatriates in the United States, she said, but many of them involve much smaller amounts of money and are like social clubs.

"It's just like for fun and for friendship, but for businesspeople the amount is big so there comes some problems," Kwon said.

It's not unusual, too, for participants to disappear after receiving money from a kye.

"Those things happen especially when the economy is bad. Sometimes they are willing to pay, but they don't have money," Kwon said.

Yi claims he depleted his personal resources as he tried to hold together at least two kyes after some members bolted. Some of his accusers claim he used their money for personal expenses such as paying employees at his dry cleaning business and gambling sprees at casinos. The investigation before Yi's arrest found he took out money from ATMs in Black Hawk and Cripple Creek in May 2003, and Black Hawk, Cripple Creek and Las Vegas in June and July 2003. The investigation doesn't say how much money Yi withdrew or whether it was money from the kyes he led.

The accusations flying in all directions, the informal nature of kyes, old grudges among participants and uncertain translations between Korean and English made for dizzying court hearings.

J. Ronald Voss, an attorney who represented Yi in his bankruptcy and other civil matters until 2006, said the financial transactions in a kye are particularly difficult to sort out.

"I admire the Korean people in this community in terms of their work ethic," he testified in court. "However, their business practices are suspect."

CONTACT THE WRITER: 636-0187 or perry.swanson@gazette.com