A former real estate broker at Colliers International Group admitted that he tried to bribe a foreign government official in order to secure a massive commercial real estate deal, but failed in that effort when the intermediary who was supposed to pass the money to the government official kept it for himself.
The Securities and Exchange Commission announced this week that New Jersey real estate broker Joo Hyun Bahn pleaded guilty to violating the Foreign Corrupt Practices Act for attempting to bribe a foreign official from an unidentified country in the Middle East as part of an attempt to close an $800 million deal on a commercial property in Vietnam.
But Bahn wasn’t even successful in the bribery attempt, because the person he thought was going to deliver the six-figure bribe kept the money instead of passing it along. And the foreign official that was supposedly in on the scheme actually had no idea of the bribery attempt at all.
But that’s not all. Bahn also admitted to sidestepping Colliers’ internal accounting controls, fabricating documents, creating fictitious emails, and lying to Colliers executives, all in effort to cover up his bribery attempt.
And the scheme is even more complicated than that.
The SEC’s order found that Bahn was trying to broker the sale of Landmark 72, a high rise commercial building in Vietnam, on behalf of Colliers.
As it turns out, Bahn’s father, Ban Ki Sang, was a senior executive at Landmark 72.
According to the U.S. Attorney’s Office, which brought related criminal charges, the elder Ban discovered that the debts that his company owed were “mounting,” and contacted his son, the real estate broker, to try to sell the building for a hefty profit to cover the debts.
An SEC investigation found that Bahn came into contact with an “accomplice” named Malcolm Harris, who claimed that he could help make the deal happen by facilitating a bribe to the foreign official, who was an officer and employee of the government of an unnamed country located in the Middle East.
Later, the official worked for the country’s sovereign wealth fund, which has global investments in banking, mining, automobile and commercial real estate sectors.
Harris claimed that he could help bribe the foreign official, who would then convince the sovereign fund to acquire Landmark 72
Over the course of their communication, Bahn and Harris settled on the word “roses” as a code word to discuss the bribe.
In March 2014, Harris emailed Bahn to say that the foreign official required payment of “250 roses” ($250,000) upfront and an additional “750 roses” ($750,000) after the deal was completed.
After replying and offering to up the bribe amount in exchange for arranging a higher purchase price, Bahn received an email purportedly from the foreign official claiming that the purchase price was set at $800 million and the acceptable bribe amount was now “500 roses” ($500,000).
Bahn then had to come up with the money for the bribe, so he discussed it with an unnamed co-worker, who then introduced Bahn to a non-Colliers related business associate who eventually loaned Bahn the $500,000.
Later that month, Bahn saw to it that a check was issued to an entity controlled by Harris, expecting the accomplice to forward the money to the foreign official. Instead, Harris kept the money for himself.
According to the U.S. Attorney’s Office, Harris then spent the money on “lavish personal expenses, including rent for a luxury penthouse apartment in Williamsburg, Brooklyn.”
From there, the scheme got more complex as Bahn attempted to cover his tracks and make it appear that the sale was moving forward, despite no such progress being made.
In fact, in early 2015, Bahn falsely claimed to Colliers executives that the Landmark 72 deal had actually closed, including faking an email from the building’s owners that said that the deal was done and Colliers had earned its fee on the deal.
Later that year, Bahn was in discussions with the fund that was supposedly buying the building about the deal, but the fund told Bahn that it did not view the building as a suitable investment and would not buy the building.
Then, in mid-May, Bahn’s co-worker saw a Korean television news report that the fund had never intended to buy Landmark 72 and then informed Bahn’s supervisor that the letter of intent on the deal was a fake.
Bahn’s supervisor then told Bahn to provide a timeline of his work on the deal. Shortly after that, Bahn sent the following message to the foreign official, via LinkedIn:
This is very urgent. In regards to Landmark 72 deal in Hanoi, Vietnam, we were told that you promised to close the deal at USD 800MM after you receive $500,000 from us. We gave [Bahn’s accomplice] $500,000 and he subsequently wired it to you.
Can you confirm this?
The foreign official, knowing nothing of the purported bribe, forwarded the email to the fund’s chief compliance officer. The fund then sent a cease-and-desist letter to Bahn and Colliers letting it be known that the fund “is not interested in and has never attempted to buy Landmark 72.”
Colliers then terminated Bahn.
The SEC’s order found that Bahn violated the FCPA’s anti-bribery provisions, intentionally circumvented Colliers’ internal accounting controls, and falsified its corporate books and records.
As part of a settlement, Bahn agreed to pay $225,000 in disgorgement,
Bahn also pleaded guilty earlier this year to one count of conspiracy to violate the FCPA and one count of violating the FCPA, each of which carries a maximum sentence of five years in prison.
Last year, Harris pleaded guilty to one count of wire fraud and one count of conducting monetary transactions in illicit funds and was subsequently sentenced 42 months in prison.
