A Newport Coast woman was sentenced today to three years in prison for defrauding seven banks of an estimated $4.7 million.
(Flickr/Damian Gadal)
Cheri L. Shyu, 61, pleaded guilty in January 2012, along with her husband, in connection with the fraud involving a $130 million revolving line of credit from a consortium of seven banks for their Anaheim-based home decor business, Galleria USA Inc., according to Thom Mrozek of the U.S. Attorney’s Office.
U.S. District Judge Cormac Carney also ordered Shyu to pay $4.7 million in restitution.
Her husband, Thomas Chia Fu, 64, is scheduled to be sentenced March 12. Assistant U.S. Attorney Jeannie Joseph recommended 46 months in prison for Shyu, while defense attorney Steve Katzman argued for continued home confinement in part so she could keep earning money to pay restitution.
Shyu, whose company was Home Depot’s “vendor of the year” for 2006-07, has paid $250,000 in restitution, Katzman said.
It’s not clear whether she has any means to pay back more, according to Joseph.
As the economy began to fail, the couple began inflating the company’s income by tens of millions of dollars to continue borrowing money under the revolving line of credit, prosecutors said.
They also doctored the company’s computer system to hide Galleria’s finances, according to court papers, which state that the fraud took place from October 2008 to July 2009.
Shyu cried as she apologized to Carney during her sentencing hearing.
“There was a lot of tragedy that came from the financial crisis,” Katzman said. “And people did things that were bad and wrong, but they were facing tremendous pressure. It doesn’t make someone a lifelong crook.”
Since being indicted, Shyu has been operating two similar businesses with many of the same customers, Katzman said.
Joseph argued that it was important that Shyu do some time behind bars as a deterrent to others, “so people who own businesses, especially in this time of economic difficulty, know that there are consequences to defrauding banks other than losing their businesses.”
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