Gemcoin Investors Detail Allegations Against Arcadia Councilman Wuo, Cryptocurrency Founder Chen

Arcadia Weekly obtained this image of John Wuo with Steve Chen and other GemCoin officials. – Courtesy Photo

Protesters Are Expected to Turn out in Force at the Arcadia Council Meeting Tuesday Evening

By Joe Taglieri

A group of investors in an Arcadia-based cryptocurrency on Monday explained a variety of allegations of impropriety against City Council Member John Wuo and Steve Chen, the chief executive behind the investment product known as Gemcoin.

The investors – who are Chinese immigrants and in recent weeks have gone public with charges ranging from large-scale fraud and death threats by Chen and questionable campaign fundraising and fixing code enforcement violations by Wuo – raised a number of questions that challenge Wuo’s multiple public denials that he has played a significant role in Gemcoin marketing and has strong ties to Chen, who heads the virtual currency’s parent companies Alliance Financial Group and USFIA Inc.

At an evening news conference with several local media outlets investors also expressed concern for their safety as a result of publicly airing their concerns, noting the cache of firearms allegedly stored at Chen’s office complex and his home. A photo obtained by Arcadia Weekly shows Chen in possession of a long-range, high-power riffle. Other photos feature men described as associates of Chen posing with a shotgun and a machine gun.

Steve Chen posing with a 50 mm Sniper’s rifle – Courtesy Photo

One Gemcoin investor, who confirmed recent media reports that he has been in contact with the Arcadia Police Department as well as the FBI, claimed a man he identified as Baoping Zhang, Chen’s “bodyguard and head of security,” threatened to kill him in April 2014 for attempting to recover his investment.

With the help of a translator Jason Ning recounted his experience with Chen, Wuo and Gemcoin, which began in September 2013 and culminated with an incident at Chen’s company headquarters in which Ning alleges Zhang aimed a gun at his head and threatened his life.

Sam Huang supported Ning’s allegation, claiming Chen’s security chief bragged to him about threatening Ning with a gun.
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USFIA marketing material claims the company owns a Dominican amber mine, which serves as Gemcoin’s financial backing for the cash USFIA receives from investors. Gemcoin marketing material states the amber extracted from the Dominican Republic eventually becomes valuable jewelry.

Ning said he traveled to the mine and discovered it was not yielding amber.

Ning and another investor said Chen imported amber mined in Mexico that he claimed was from the Dominican mine.

Ning and fellow investors Michael Liu and others who requested anonymity said they first became concerned about Chen’s credibility and the safety of their investments in July 2014 when Ning returned from the Dominican Republic.

Last month a document surfaced showing Wuo and Chen were partners in a company that the California Secretary of State’s office confirms is an active business.

Another photo obtained by Arcadia Weekly shows Wuo, Chen, Solomon Yang and another executive in 24 HD Surveillance security camera company signing what the disgruntled investors said was the document Wuo denied having filled out. The contents of the documents on the desk in the photo could not be confirmed.

Despite Wuo’s assertions that he knows nothing about Gemcoin on an operational level, sources said a reporter who was at Chen’s office complex Monday witnessed Wuo enter the building.

Chen and USFIA employees did not respond to requests for comment.

The Gemcoin investors all said Wuo’s endorsement of the cryptocurrency was what convinced them it was a good idea to commit in some cases hundreds of thousands of dollars.

In an interview broadcast last week on a local news station, Wuo challenged investors to take responsibility for their investment decisions.

“It’s up to the investor what they need to do, not up to me because I don’t know anything about the company, I don’t know their operation,” Wuo said.

“John Wuo is a liar because [he] supported this corporation,” said Ning.

As reported in the Los Angeles Times, “USFIA executives described Gemcoin as a rewards system comparable to frequent flier miles. The company sells packages of actual gems, then awards Gemcoins based on how much is purchased, Andy Beal, corporate counsel for USFIA, said in an email. Customers earn money by selling the gems and recruiting people to become sellers.

“The rewards system will be converted to a cryptocurrency, or digital currency, by the end of the year,” Beal said. “At the moment, Gemcoins can be redeemed only for ‘company products and services’.

“Claims by Gemcoin critics are unfounded,” Beal said.

Disgruntled investors and their supporters said they expected a group of about 50 to attend the Arcadia City Council meeting Tuesday evening.

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