A San Francisco Bay Area man was indicted Wednesday for allegedly defrauding over 100 people of $39 million by conning them to invest in a bogus business reselling NBA tickets, federal prosecutors said.
Derek Vincent Chu, 41, of Alamo, ran the Ponzi scheme between late 2013 and 2020, asking investors to put their money towards a plan to buy and resell tickets and luxury suites at Oracle Arena in Oakland, the Staples Center in Los Angeles and the Chase Center in San Francisco, U.S. Attorney's Office with the Northern District of California said in a news release. Oracle Arena and the Chase Center are the home arenas of the Golden State Warriors (who moved from Oakland to San Francisco in 2019), while the Staples Center, now known as the Crypto.com Arena, is home to the Los Angeles Lakers and Clippers.
The indictment alleges that Chu "induced investors by making numerous materially false misrepresentations, including how the investor funds would be used, how investors would be repaid, and whether the investments were secured by collateral," according to the release.
Chu also allegedly mixed his investors' money with his own, using their funds to pay off other investors and spending some $7.3 million of it to pay for his own travel, luxury cars, jewelry and more, the prosecution said.
Chu was arrested Wednesday morning, after an investigation by the Internal Revenue Service, the Federal Bureau of Investigation, and the San Francisco Police Department. Indictment charges include eight counts of wire fraud and three counts of money laundering, according to the U.S. Attorney's Office. If he is found guilty, he could face decades in prison.
The news comes as ticket prices at Chase Center spike, with the Warriors taking on the Lakers in the Western Conference Semifinals. First-row tickets to Thursday night's Game 2 are going for as much as $9,000 each on StubHub.