Case 2:14-cr-00024-RAJ Document 9 Filed 04/01/14 Page 1 of 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 v. DICKSON LEE, Defendant. UNITED STATES OF AMERICA, Plaintiff,

Magistrate Judge James P. Donohue

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON AT SEATTLE

NO. CR14-024RAJ UNITED STATES SUPPLEMENTAL FILING IN SUPPORT OF A MOTION FOR DETENTION

The United States of America files this supplemental briefing in support of its

17 motion to detain the defendant, Dickson Lee, pending trial. Lee was arrested on March 18 16, 2014, upon entry at Sea-Tac airport from Taipei, Taiwan. Lee has been charged in a 19 ten count Indictment for securities fraud, false certifications, and false submissions to the 20 Securities and Exchange Commission. A detention hearing has been set for April 1, 21 2014. 22 Detention is warranted because Lee presents both a serious risk of flight and a 23 serious risk of obstruction of justice. See 18 U.S.C. 3142(f)(2). Indeed, Lee has 24 already attempted to mislead Pretrial Services in an effort to gain release by hiding the 25 extent of his overseas ties and failing to provide requested information. As detailed 26 below, Lees ties to the Western District of Washington are superficial, he has little 27 incentive to remain in the United States, and he has access to substantial wealth in 28 Taiwan. Finally, Lee has attempted to tamper with two witnesses during the course of
United States Supplement In Support of Motion for Detention/ - 1 Dickson Lee, CR14-024RAJ
UNITED STATES ATTORNEY 700 STEWART STREET, SUITE 5220 SEATTLE, WASHINGTON 98101 (206) 553-7970

Case 2:14-cr-00024-RAJ Document 9 Filed 04/01/14 Page 2 of 9

1 this investigation, presenting serious concerns about the integrity of the proceedings if 2 Lee is not detained. 3 4 I. BACKGROUND Dickson Lee is the Chief Executive Officer and Chairman of the Board of L&L

5 Energy, Inc., a NASDAQ listed company. According to L&Ls public filings, L&Ls 6 business consists of coal mining and coal wholesale in China. L&L maintains its 7 corporate headquarters in Seattle, Washington, but no revenue generating operations 8 are conducted anywhere in the United States. 9 On January 29, 2014, a grand jury returned a ten count indictment charging 10 Dickson Lee with Securities Fraud, in violation of 18 U.S.C. 1348, False Sarbanes11 Oxley Certifications, in violation of 18 U.S.C. 1350, and False Submissions to the 12 Securities and Exchange Commission, in violation of 15 U.S.C. 78m(a) and 78ff. The 13 maximum statutory penalties associated with these various offenses range from twenty to 14 twenty five years imprisonment and millions of dollars in fines. 15 The indictment alleges, in essence, that Dickson Lee in 2008 through 2009, 16 fabricated the existence of a Chief Financial Officer for L&L Energy, representing that a 17 certain individual was the companys CFO when she was not; and forged required CFO 18 certifications that accompanied the companys annual and quarterly financial reports, 19 falsely attesting to the accuracy of the reports and existence of internal controls. 20 Furthermore, when the individual whose name he had used to forge the CFO 21 certifications discovered the fraud, the indictment alleges that Dickson Lee paid the 22 individual for her silence and then engaged in a cover-up resulting in further material 23 misrepresentations to the investing public. 24 25 II. ARGUMENT The Bail Reform Act requires a court to order a defendant detained pending trial,

26 if no condition or combination of conditions will reasonably assure (1) the appearance of 27 the person required, and (2) the safety of any other person and the community. 18 U.S.C. 28 3142(e). In making the determination as whether conditions exist as to assure both
United States Supplement In Support of Motion for Detention/ - 2 Dickson Lee, CR14-024RAJ
UNITED STATES ATTORNEY 700 STEWART STREET, SUITE 5220 SEATTLE, WASHINGTON 98101 (206) 553-7970

Case 2:14-cr-00024-RAJ Document 9 Filed 04/01/14 Page 3 of 9

1 prongs, 3142(g) requires the court to take into account four statutory factors: (1) the 2 nature and circumstances of the offense charged; (2) the weight of the evidence against 3 the person; (3) the history and characteristics of the person, including his character, 4 physical and mental condition, family ties, employment, financial resources, length of 5 residence in the community, community ties, past conduct, history, and record 6 concerning appearance at court proceedings; and (4) the nature and seriousness of the 7 danger to any person or community that would be posed by the persons release. The 8 burden of proof rests with the Government which must establish risk of flight by a 9 preponderance of the evidence, and risk to others and the community by clear and 10 convincing evidence. United States v. Motamedi, 767 F.2d 1403, 1405 (9th Cir, 1985). 11 A. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
United States Supplement In Support of Motion for Detention/ - 3 Dickson Lee, CR14-024RAJ
UNITED STATES ATTORNEY 700 STEWART STREET, SUITE 5220 SEATTLE, WASHINGTON 98101 (206) 553-7970

Dickson Lee Poses a Serious Risk of Flight. Dickson Lee is charged with offenses that carry substantial penalties, including jail

time. Lee has no incentive to remain in the United States and substantial means available to permanently flee the country. Lees willingness to mislead Pretrial Services, and by extension, this Court, with respect to his ties to Taiwan are indicative of how far he is willing to go to obtain release. At the time of initial appearance, Lee acknowledged to Pretrial that he travelled frequently to China, but pointed to homes he owned in the Seattle area as evidence of ties to this District. Lee also stated that he had certain bank accounts overseas, but provided no details as to the amount and extent of foreign assets. No one to date has come forward on Lees behalf with any details regarding Lees foreign assets in spite of Pretrial requests. When asked about family ties in the area, Lee disclosed one adult child in the Boston area, and siblings in other parts of the United States. Lees information to Pretrial is misleading, designed to hide the extent of his true ties to Taiwan, the amount of assets he maintains overseas, and the superficial nature of his connection to this District. First, there is a basic conflict of information regarding where in the United States Lee maintains a residence, if at all. Even though Lee

Case 2:14-cr-00024-RAJ Document 9 Filed 04/01/14 Page 4 of 9

1 suggested the homes in the Kent area, a review of Lees official drivers license indicates 2 that he is listed as a resident of Florida. Lee made no mention of the Florida residence to 3 Pretrial. A printout from the Florida Department of Motor Vehicles for Dickson Lee 4 indicating a current, valid Florida drivers license with a Florida address is attached as 5 Exhibit A. 6 Second, it is not accurate to suggest that Lee lives in the United States and 7 travels to China. Lee actually resides in Taiwan and travels back to the United States 8 for short periods of time. The United States has obtained U.S. customs records of Lees 9 entries and exits. Over the last 12 months, Lee has spent collectively no more than 39 10 days in the United States, returning each time, except in one instance, to Taipei. The one 11 exception was a return to Beijing. In prior contexts, Lee himself has confirmed that he no 12 longer resides in the U.S. On March 13, 2013, Lee testified under oath before the 13 Securities and Exchange Commission in a parallel investigation. During the testimony 14 Lee clarified that because he now spends 95 percent of the time overseas, his tax filing 15 status is one of a citizen living abroad. An excerpt of the relevant March 13, 2013 SEC 16 deposition testimony is attached as Exhibit B. 17 Third, the reason Lee resides in Taiwan is that he has successfully removed most 18 if not all of his personal, financial, and business affairs there. Lee told Pretrial Services 19 he had only one child, an adult, in the Boston area, suggesting he no longer has any 20 dependents. That information is false. Lee has two additional children, less than 3 years 21 old, living in Taiwan. On July 1, 2013, Robert Lee, Dickson Lees brother, was 22 interviewed by the government. According Robert Lee, Dickson Lee owns a home in 23 Taipei, Taiwan where he resides with the children and the childrens mother Jung Mei 24 Wang, a.k.a. Rosemary Wang. Rosemary Wang is a former financial officer of L&L, a 25 witness in this case who has so far rebuffed requests for information. An excerpt of a 26 memorandum of interview provided by Robert Lee is attached as Exhibit C. 27 In addition to his personal ties, Lee has transferred substantial financial assets to
United States Supplement In Support of Motion for Detention/ - 4 Dickson Lee, CR14-024RAJ
UNITED STATES ATTORNEY 700 STEWART STREET, SUITE 5220 SEATTLE, WASHINGTON 98101 (206) 553-7970

28 Taiwan and China, providing him with the means and further incentive to flee and never

Case 2:14-cr-00024-RAJ Document 9 Filed 04/01/14 Page 5 of 9

1 return. The government has obtained and reviewed banking information for Lees main 2 personal bank account held at East West Bank for the year 2013. The governments 3 analysis revealed that throughout 2013, Lee transferred more than $200,000 to various 4 accounts located in Taiwan, Hong Kong, and China so that by December 2013, the 5 accounts balance was left at less than $300. Due to the sensitive nature of the banking 6 documents, relevant excerpts will be provided to the Court for review at the time of 7 hearing. 8 A review of L&Ls main corporate business bank account shows a remarkable 9 parallel shift of funds overseas in the same time frame, so that by end of December 2013, 10 the L&L corporate account that had routinely carried an average balance in the hundreds 11 of thousands of dollars was left with a balance of less than $300. Again, an analysis of 12 the banking information showed that millions of dollars were transferred to various 13 accounts in China. 14 Finally, the banking information revealed that Dickson Lee personally had access 15 to substantial cash in Taiwan. On May 22, 2013, the L&L corporate bank account 16 received an incoming wire from a bank account held in the name of Dickson Lee in the 17 amount of $999,912. 90. This wire was traced to a Taiwanese bank account held in 18 Dickson Lees name. 19 Lee may argue that the continuation of L&Ls business and exoneration of his 20 name is an incentive to stay. The argument is hollow in light of publicly announced 21 plans by L&L to seek a listing on a Taiwanese exchange. In addition, NASDAQ halted 22 trading in L&L stock in November 2013. The current allegations will likely lead to a 23 delisting, eliminating any business reason for Lee and the company to remain in the U.S. 24 In sum, contrary to the information given to Pretrial, Lee has nothing holding him 25 to the Western District of Washington and every incentive and the where-with-all to flee 26 permanently. He has little children who are dependent upon him, a fact Lee chose to hide 27 from Pretrial. His personal financial affairs and L&Ls financial affairs have ostensibly 28 been transferred overseas. All revenue generating operations conducted by L&L is in
United States Supplement In Support of Motion for Detention/ - 5 Dickson Lee, CR14-024RAJ
UNITED STATES ATTORNEY 700 STEWART STREET, SUITE 5220 SEATTLE, WASHINGTON 98101 (206) 553-7970

Case 2:14-cr-00024-RAJ Document 9 Filed 04/01/14 Page 6 of 9

1 China. Electronic monitoring and the confiscation of passports are not fail-safe, 2 especially in light of Lees already demonstrated willingness to mislead Pretrial and this 3 Court. There appears to be no condition short of detention that would assure the 4 defendants appearance. 5 B. 6 Dickson Lee Poses a Serious Risk of Obstruction of Justice. The underlying criminal case includes allegations that in 2009, when N.L.

7 discovered that she had been fraudulently held out as L&Ls CFO, Dickson Lee paid her 8 to keep her silent and subsequently engaged in a cover up. Dickson Lees pattern of 9 corrupt conduct continued throughout this investigation and extended to tampering with 10 witnesses. 11 In March 2013, during his deposition testimony before the SEC, Dickson Lee was 12 questioned extensively regarding the CFO situation and specifically about N.L. Lee was 13 confronted with evidence that N.L. did not serve as the CFO during the time the company 14 made filings representing such. Dickson Lee testified that a former L&L employee, Rui 15 Liang, could give information that in fact N.L. did the work of CFO. In April 2013, after 16 the deposition, the United States Attorneys Office formally informed Dickson Lees 17 counsel that Lee and the company were targets of a criminal investigation. 18 On June 7, 2013, the government interviewed Rui Liang. Liang told investigators, 19 however, that she had no dealings with N.L. during the time period she was purportedly 20 the CFO. Liang further explained that in May 2013, after Dickson Lees deposition and 21 after his counsel had been informed that he was the target of a criminal investigation, 22 Lees personal assistant, Candy Tang, requested that she and Liang meet for lunch. 23 During this lunch meeting, Tang offered Liang 5000 shares of L&L company stock in 24 return for Liang signing a statement that Liang had worked with N.L. in reviewing 25 financial statements during N.L. tenure as CFO. Liang questioned the necessity of such a 26 document and Tang had insisted simply that the SEC needed it. Liang did not sign the 27 document or accept payment and clarified to investigators that the suggested statement 28
United States Supplement In Support of Motion for Detention/ - 6 Dickson Lee, CR14-024RAJ
UNITED STATES ATTORNEY 700 STEWART STREET, SUITE 5220 SEATTLE, WASHINGTON 98101 (206) 553-7970

Case 2:14-cr-00024-RAJ Document 9 Filed 04/01/14 Page 7 of 9

1 was false. Excerpt of the memorandum of interview of Rui Liang is attached as Exhibit 2 D. 3 Dickson Lee subsequently used Candy Tang to also tamper with Robert Lee prior 4 to his interview with the government. During Lees SEC deposition testimony, attorneys 5 inquired extensively as to the reasons his brother, Robert Lee, sold shares of L&L stock 6 and gave money to L&L. On July 1, 2013, Robert Lee met with investigators in 7 connection with this case. Robert Lee explained that a week before the interview, he was 8 contacted suddenly by Candy Tang, Dickson Lees assistant. Robert Lee was surprised 9 because Tang does not usually call him. Tang instructed Robert Lee not to tell 10 investigators that he loaned money to the company because the company needed the 11 money, but because of the 10% interest that was offered. Robert told investigators that 12 the interest was not the reason he loaned the money. He sold shares and loaned the 13 money because Dickson told him to. Excerpt of the memorandum of interview of Robert 14 Lee is attached as Exhibit E. 15 The clear and convincing evidence demonstrates that Dickson Lee uses proxies to 16 tamper with witnesses. Such conduct cannot be deterred with electronic monitoring and 17 confiscation of passports and verbal admonishments. Given Dickson Lees repeated 18 pattern of corrupt behavior, coupled with his attempted deception of Pretrial Services, 19 shows that there are no conditions that will ensure the integrity of the process. 20 Accordingly, detention is warranted. 21 22 23 24 25 26 27 28
United States Supplement In Support of Motion for Detention/ - 7 Dickson Lee, CR14-024RAJ
UNITED STATES ATTORNEY 700 STEWART STREET, SUITE 5220 SEATTLE, WASHINGTON 98101 (206) 553-7970

Case 2:14-cr-00024-RAJ Document 9 Filed 04/01/14 Page 8 of 9

1 2

CONCLUSION For the reasons stated above, the United States respectfully requests that this Court

3 enter an order detaining Dickson Lee pending trial of this matter. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

United States Supplement In Support of Motion for Detention/ - 8 Dickson Lee, CR14-024RAJ
UNITED STATES ATTORNEY 700 STEWART STREET, SUITE 5220 SEATTLE, WASHINGTON 98101 (206) 553-7970

DATED this 1st day of April, 2014. Respectfully submitted, JENNY A. DURKAN United States Attorney /s/ Katheryn Kim Frierson KATHERYN KIM FRIERSON Assistant United States Attorney WSBA # 37794 700 Stewart Street, Suite 5220 Seattle, Washington 98101 Telephone: (206) 553-7970 Facsimile: (206) 553-2502 E-mail: Katheryn.K.Frierson@usdoj.gov

Case 2:14-cr-00024-RAJ Document 9 Filed 04/01/14 Page 9 of 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

CERTIFICATE OF SERVICE I hereby certify that on April 1, 2014, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the attorney(s) of record for the defendant(s).

/s/Anna Chang ANNA CHANG Paralegal United States Attorney=s Office 700 Stewart Street, Suite 5220 Seattle, Washington 98101-1271 Telephone: (206) 553-7970 Facsimile: (206) 553-4440 E-mail: Anna.Chang@usdoj.gov

United States Supplement In Support of Motion for Detention/ - 9 Dickson Lee, CR14-024RAJ

UNITED STATES ATTORNEY 700 STEWART STREET, SUITE 5220 SEATTLE, WASHINGTON 98101 (206) 553-7970