The U.S. Court of Appeals for the Seventh Circuit on August 21, 2019, upheld the convictions of Heon Seok Lee, founder and CEO of South Korea’s KTurbo. A jury had found that he passed off turbo blowers built in South Korea as USA-assembled so local wastewater projects could buy them with stimulus money.
The scheme
- The 2009 American Recovery and Reinvestment Act set aside $6.4 billion for EPA water-infrastructure projects. Its Buy American provision required that the goods be made in the USA.
- Local governments required suppliers to sign Buy American certifications.
- On December 8, 2010, a Customs officer at a warehouse near the Port of Los Angeles opened a container from South Korea. Inside was a fully assembled, five-foot turbo blower with a placard reading “Assembled in USA.”
The case
- A grand jury indicted Lee on five counts of wire fraud and three counts of smuggling. A jury in Chicago convicted him on all counts.
- The district court first sentenced him to 20 months plus restitution. It later resentenced him to 12 months after recalculating the loss, which it had first put at about $180,000 received from defrauded municipalities.
- The appeals court rejected Lee’s challenges to his convictions and to the restitution order. It also rejected the government’s cross-appeal of the sentence.
The Associated Press reported that Lee had been extradited to the USA in 2015.
FAQ
Who is Heon Seok Lee?
The founder and CEO of KTurbo, a South Korean maker of turbo blowers for wastewater plants.
What law did the scheme target?
The Buy American provision of the 2009 Recovery Act.
What did the appeals court decide?
It affirmed his wire fraud and smuggling convictions and his sentence.
Source & credit
Source: U.S. Court of Appeals for the Seventh Circuit, United States v. Heon Seok Lee, Nos. 18-1687 & 18-1950, decided August 21, 2019: opinion via FindLaw.
Also: Associated Press, via WPTV.