A businessman with longtime ties to Alaska has been charged in federal court for his alleged role in illegally distributing $1 billion in Iranian funds to countries worldwide.
The federal indictment comes several months after prosecutors finalized a civil case in which millions of assets belonging to the man and his family were forfeited.
Kenneth Zong, 77, is named as the sole defendant in the 47-count indictment handed up by a federal grand jury in Anchorage on Wednesday, according to the U.S. Attorney’s Office in Alaska.
Prosecutors allege Zong violated the International Emergency Economic Powers Act, which authorizes the president to impose sanctions against foreign countries the government deems a threat, such as Iran.
The indictment alleges that in January 2011, and continuing through at least April 2014, Zong and four co-conspirators – three Iranian nationals and one U.S. citizen – conspired to evade international sanctions by generating fake business transactions to convert Iranian funds to $1 billion.
“These funds were held in controlled Korean bank accounts, and converted into more easily tradeable currencies, such as dollars and/or euros, by defrauding the Korean regulators into thinking the transactions were legitimate. Zong is charged with transferring those currencies worldwide, and receiving payment for these acts from the Iranian nationals in an amount from $10 million to $17 million,” prosecutors said.
The four co-conspirators are unnamed in the indictment. But according to a civil forfeiture lawsuit filed in 2014, one of Zong’s sons, Mitchell Sub Zong, allegedly helped his father launder the millions. Assistant U.S. Attorney Steven Skrocki said he could not comment about anything that is not in the criminal indictment.
Along with real estate, authorities assert Zong bought cars, jewelry and interest in a yacht. He allegedly spread his earnings through many of these assets to family members.
Kenneth Zong told Korean prosecutors that while at Colorado State University Mitchell was a classmate of Majid Fasoodeh, an Iranian associated with Farsoodeh & Partnership. The relationship was the kernel that enabled Kenneth to embark on the alleged international money-laundering scheme.
Farsoodeh & Partnership is a company linked to individuals working for the government of Iran in association with the civil case.
A naturalized U.S. citizen, Zong is currently imprisoned in South Korea, said Skrocki.
Zong ran the Phillips International Inn restaurant in Anchorage along with his wife, Kilja. They also operated the Trattoria Bella restaurant. Both eateries closed in 2006. After that, Kenneth Zong became involved in trying to market surplus Alaska pink salmon to Korea, as well as various other businesses in the state.
Zong was convicted in Korea for breaking that country’s foreign exchange and customs laws by filing false import and export documents.
The crimes were linked to the financial operations of one of his Korean companies, Anchore, formerly KSI Ejder. In June 2013, he was sentenced to a two-year prison term, fined $20,000 and forced to forfeit $6 million.
Anchore forms the basis for many of the charges Zong faces here. He changed the name of his Korean company, KSI Ejder, to Anchore in 2011, and he used the company to convert Iranian funds into more viable currencies by creating sham business transactions involving fictitious sales of marble tile and other construction equipment to an Iranian shell company, prosecutors said.
Anchore created fake contracts, bills and invoices to trick Korean banking regulators into thinking the transactions were legitimate and legal, according to the indictment.
Those allegations make up only a handful of the charges. A total of 43 counts are related to the $10 million compensation Zong allegedly received. Zong’s Anchorage-based partner in crime used the money to create front companies to purchase real estate and vehicles, prosecutors said.
In addition to the forfeiture of two homes here and another in Eugene, Oregon, the government took ownership of 23 condominiums previously managed by Mitchell Zong, one of Kenneth’s sons.
A Subaru, a Porsche, a Toyota pickup, a Mercedes-Benz and a Yamaha motorcycle were sold off early in the court process to retain value. Funds taken from multiple bank accounts tied to the case range from as little as $8,300 to $1.3 million, court records show.
It took the government more than two years to issue a final order of forfeiture, totaling more than $8 million in assets, in the civil case against Zong. Skrocki said prosecutors chose to move forward with criminal charges because the alleged crimes are taken seriously among nations.
“Certainly, given the nature of the laws prohibiting U.S. citizens from doing business with citizens of Iran, there is a national and international interest in prosecuting something like that,” he said.
Prosecutors are seeking the extradition of Zong from South Korea to Alaska, Skrocki said. It’s hard to say how long that process may take, he said.