Tuesday, September 29, 2015

USFIA Update Continued

Previously, we have covered how Amkey exited China after series of scandals (product problems, repeated changes of comp plan, sudden reversal of "opening stores" plan)  and never received the direct sales license it needed to operate in China, leaving thousands of distributors stranded and disillusioned.

What was surprising though is Amkey continued to operate outside of China, and attracted a following in Singapore and nearby countries.

Amkey and AllianceNGN 

Despite Amkey quietly withdrawing from China, it apparently enjoyed several years of continued growth, or at least fast recruitment, in places such as Singapore, Malaysia, Taiwan, and places that speaks Chinese, mainly by adding something called "NGNTalk", an IP talk product for long distance calling without the long distance fees.

NGN Talk's parent company, Alliance NGN, has a very intriguing Chinese name 美国联邦环球通which literally translates to US Federal Global Talk. Really official sounding, isn't it?

Various Chinese fan websites claimed that "Alliance NGN" has received FCC and EC certification. Searching FCC website shows no such certification.

The NGNTalk fan sites (in Chinese, example here, and here), and blogs littered all over the place about NGNTalk hinted at the level of recruiting. The deeper the tree, the higher the share (up to 20% if you go beyond level 8) as well as direct reward for recruiting per head, and so on.

If you look at the main menu of the alliancengn.com, it was actively soliciting investments. Why else would it have "Investor Guide" on its website as a main menu item?

Alliance NGN website, courtesy of web designer MartinMa
Note the section above: Investor information
This was confirmed when one digs into Alliance NGN's innards, where you discover that you can sign up and "invest" and even trade and receive "guidance".

Alliance NGN backoffice screenshot courtesy of MartinMa
Apparently one can invest money into "brokerage accounts" at Alliance NGN, which
was supposed to be a "telecom" company... Hmmmm.... 

Here's a promotional video of an award ceremony and celebration of various reps with Steve Chen in attendance, believed to be 2008 or 2009. 

There seem to be locally registered Amkey companies in Singapore and Malaysia. Apparently Steve Chen took some time to travel to Singapore and Malaysia in 2009. There were many photos of Steve Chen from that trip, with Steve Chen wearing a purple Amkey polo.

Amkey Singapore Team, photo of Steve Chen (leftmost) and unknown individuals, dated 20-NOV-2009

Amkey Co., Ltd. was sanctioned in Taiwan in 2009, where the Fair Trading Commission ruled that Amkey violated Fair Trade Law for repeated failures to file reports of alterations to its sales system to the Commission. According to a separate news article, it was fined 300000 NTD (link in Chinese) (roughly 9000 USD based on current exchange rate) for charging "transaction fees" and various violations of laws in relation to multilevel marketing in Taiwan. 

Amkey Singapore apparently declared bankruptcy and closed sometime in late 2009 and was liquidated by court order after a management company sued. 

Amkey Singapore ordered closed by court in late 2009,
may have skipped out on rent or building costs? 

Amkey website is still active today, but there seems to be no member activity in the past 5 or so years.

Amkey in the US

Amkey was in SoCal, and apparently moved a lot, as there were multiple addresses listed for it, including

  • 2570 Corporate Place, Monterey Park
  • 1111 Corporate Center Dr. Suite 105, Monterey Park
  • 2570 Corporate Place Suite E1, Monterey Park (variation of first)
  • 12801 Schabarum Ave, Baldwin Park, CA
  • 12801 Schabarum Ave, Irwindale, CA (same as above?)
  • 135 E. Live Oak Ave, Arcadia, CA (current, same as all other Steve Chen companies)
That's at least four separate addresses, even if you discount the possible duplicates.

Searching through Google on Amkey showed a surprising result... On May 24th, 2010, Amkey was accused by Environmental Research Center (ERC) of California for Prop 65 violation: poisoning the public with stuff containing lead... Products "Fem Essence, OPC Plus, Kidney Boost, Royal Propolis, and Biolin" all contain lead and thus are in violation of California Health and Safety code. Apparently no action was taken, and a second warning was issued by ERC to Amkey about another product, "P2H" containing lead on October 8, 2010.  It is not know what did Steve Chen do to resolve this, as there was no record of settlement or judgment filed with the Office of Attorney General.

No one heard much about Amkey after 2010

So, did Steve Chen really found China Unicom?

There were repeated claims, even today, that Steve Chen, i.e. Chen Li 陳力, allegedly founded China Unicom in 1993.

screencap from gemcoin.ch, "Steve Chen... in 1993... created China Unicom"

So what was the truth? Turns out, Steve Chen did not create China Unicom. China Unicom is a state-owned enterprise of China, and was formally created on July 19, 1994, not 1993.

But to explain WHY he claimed so, we have to go back to Steve's... career. You see, Steve Chen really was in telecom. And he was pretty good at it too... at first.

Steve Chen, from 1989-1992, was in charge of a telecom upstart in Beijing called 北京凯奇通信技术公司 Beijing Kaichi Catch Communication Technology Company ("Beijing Catch"), a pager company, which evolved from a city funded telecom research institute. 

From here on the story got a little murky. As far as I can tell, the city of Beijing, with a major stake in the telecom business through Kaichi, chose Steve Chen as a representative for some sort of advisory committee to establish China Unicom next year, among unknown number of members. There were mentions of representatives from Ministry of Energy, Ministry of Railways, and so on meeting in December 1993, but I was not able to locate any details.

According to a Bloomberg profile on "Steve L. Chen", Steve Chen 陈力 (aka Li Chen / Chen Li) was "instrumental in the start-up of China United Telecommunications Co ('China Unicom') and served as one of its founding directors of the board".  How was he instrumental is a good question, as he was not among the list of executives that I can find for China Unicom circa 1994. It is possible that as head of "Beijing Catch" he was selected to represent Beijing in the first board of directors. However, it is not known how many directors there were in the founding. And in any case, he certain did not "found" China Unicom.

I was able to locate a Chinese slideshow explaining the structure of China Unicom and it mentioned Kaichi Beijing Catch as a stakeholder / stockholder along with various cities and other telecom companies, as well as Bank of China and so on. However, I was unable to locate ANY official document or citings that directly linked Steve Chen (陈力) with China Unicom.

Thus, at best, Steve Chen was a "I was there at the founding" guy, rather than a "founder". How can a single person claim to have founded a state-owned enterprise? But apparently people in the west don't have concept of "state-owned enterprises" down properly. They seem to think that all companies must have a founder when such is not the case.

There are reports that Steve Chen left China right after 1993, right after he supposedly "founded" China Unicom. As far as any one knows, Steve Chen had never stepped foot in China ever since, not even for major events like Amkey's grand opening in China or anniversaries. No one seem to know the reason.

There's no word on what happened to Kaichi Catch Comm except for a blurb in 2002, when it was reported that Kaichi Catch Comm had been issued a court judgement that it owed over 90 million (link in Chinese) to Bank of China for outstanding loans that was due back in 1997 and 1999. It was not known whether it was able to repay the debt. 

So what happened after China Unicom?

According to the Bloomberg profile, Steve Chen apparently moved to the US in 1993/1994 and became Vice Chairman of the Board of AMTEC Inc, in the US.  Unfortunately I was unable to find out what exactly was AMTEC Inc. as it is a popular name. The most likely candidate is a "leading manufacturer of auto and semi-auto custom machines" but I really have no other information.

Steve Chen then jumped ship to become Vice Chairman of the Board of Directors of ASPAC Communications in year 2000. ASPAC is listed as an internet provider in California, and it was somehow merged with a "USA International Chemicals Inc." of Encino.  Aspac is long closed.

Is there a gap between NGNTalk and USFIA?

According to information alleged by victims of Steven Chen, Steve Chen launched a scam based on his umbrella company "Alliance Financial Group", supposedly solicited money for real estate investments and REITs (real estate investment trust).

While there are many REITS among the frozen accounts registered by Steve Chen, I have not personally seen any recruiting seminars or records of such thus this is unconfirmed.

There are also allegations that Amkey, AFG, NGNTalk AND USFIA all offered protostocks, but so far, only Amkey and USFIA can be confirmed by newspaper and other reports that they indeed offered protostocks. I have no confirmation that AFG and NGNTalk also did so.

Summary and Timeline (estimated)

1989 -- Steve Chen became CEO of Beijing Catch

1993 -- Steve Chen became member of China Unicom pre-board of directors

1993? -- Steve Chen left China for the US

1996 -- Steve Chen became vice COTB of AMTEC Inc.

2000 -- Steve Chen became vice COTB of ASPAC Communications

2003  -- Steve Chen founded Amkey, selling supplements

2004 -- Amkey entered China

2005 -- China drafted direct sales legislation, all direct sales companies must be licensed

2006 -- Amkey exited China quietly after repeated controversy and failure to obtain direct sales license, but Amkey continued in Vietnam, Korea, and other Asian countries

2008 -- Alliance NGN / NGNTalk started, as some sort of "Next gen network"but acts more like a brokerage, according to sample screenshots. 

2009 -- Amkey Taiwan sanctioned, Amkey Singapore closed by court order (bankruptcy?)

2010 -- Amkey warned of lead in all its major products in California, unknown resolution

2013 -- USFIA started, along with UCCA, started recruiting members, and reached China by end of year. It appears to contain the same top players from Amkey. 

2014 -- USFIA in China attracted attention of authorities due to lack of direct sales license, and when their meetings started to attract hundreds, perhaps thousands of people. 

Victims started going to police in May, and arrests started in June. 

Two escaped to Thailand, and continued recruiting, but was arrested and extradited by "Operation Foxhunt" to apprehend overseas criminals. 

Gemcoin was announced in September 2014

2015  Leonard S. Johnson, standing in for Steve Chen, presented at various Chinatowns around north America touting how AFG backed US "Royal" Currency Fund Gemcoin is backed by amber and so on

September 29  USFIA reportedly closed by SEC and other authorities. 

EDIT: Updated Steve Chen's years between 1993 and 2000.


As I was finishing up this blog post, news came that SEC, FBI, and a host of other alphabet agencies have shut down USFIA and Steve Chen.

Finally, but "it ain't over until the fat lady sings".

There is always another scam out there. Don't let your guard down.

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