JKO Pay Founder Convicted in Crude Oil Fund Scandal, Flips Off Prosecutor in Court, Sentenced to 7 Years and Fined NT$100 Million

Hu Yi-Jia, founder of JKO Pay, was charged with using his executive power to unfairly allocate shares of an oil futures fund managed by JKO Asset Management to benefit specific securities firms and offshore companies, profiting through low-price purchases and high-price resales. On Wednesday (29), the Taipei District Court delivered its first-instance verdict, convicting Hu under the Securities Investment Trust and Advisory Services Act for breach of trust, sentencing him to 7 years in prison and a fine of NT$100 million. He was also sentenced to 6 months for forgery of private documents, which may be commuted to a fine. The ruling can be appealed.

The court found that Hu masterminded the illegal allocation scheme, with personal illicit gains amounting to over NT$35.03 million. Unrecovered proceeds were ordered to be confiscated or pursued. The court also cited Hu’s act of flipping off the prosecutor during trial as a negative factor in sentencing.

How did fund allocation become a profit-making tool?

The verdict stated that in April 2020, Hu knew the fundraising quota for the 'JKO S&P GSCI Brent Crude Oil ER 2x Daily Leveraged Index ETF Futures Trust Fund' was nearly exhausted and that the fund was trading at a significant premium, creating profit opportunities through resale.

The court determined that Hu, together with Yang Li-Wei, son of real estate tycoon Yang Chien-I, selected offshore companies TRILL and WINNER—effectively controlled by both—as subscription channels. They used Taishin Securities and Fubon Securities to purchase the fund. Wang Lu-Chieh, former chairman of JKO Asset Management, knowingly complied with instructions to prioritize allocation to these entities, after which the fund units were sold in the secondary market.

The court ruled that Hu profited NT$35,035,603, while Yang earned NT$23,826,121. The unfair allocation not only deprived other investors of fair access but also damaged JKO Asset Management’s reputation, leading the Financial Supervisory Commission (FSC) to reject the company’s subsequent fund-raising applications.

Why was forgery of documents involved?

The verdict further stated that to conceal Hu’s status as the ultimate beneficial owner of TRILL, Hu and his aide Chan Shu-Ling fabricated documents, changing the sole shareholder to Kin-Tek-Tai and forging director registers, authorization letters, and proof of director authority.

Hu also forged the signature of a Hong Kong lawyer and created certification documents, which Chan provided to First Securities Hong Kong staff to respond to FSC inquiries, thereby concealing his ties to the offshore firms.

Why did flipping off the prosecutor affect sentencing?

In its sentencing rationale, the Taipei District Court noted that Hu, as the mastermind, abused his authority and fund allocation power for personal gain, ignoring warnings and legal requirements, treating the rights of other brokers and investors 'as if they were trash.' He continued to deny wrongdoing after the fact.

During the trial, Hu expressed dissatisfaction with the prosecutor’s remarks and flipped off the prosecutor in court. He later claimed the gesture was not directed at the prosecutor but expressed frustration with the case handling, even stating, 'Even if I flipped off a hundred more times, it wouldn’t be enough.' The panel viewed this as a display of arrogance and contempt for the judiciary, factoring it into sentencing.

What were the verdicts for other defendants?

Co-defendant Wang Lu-Chieh was sentenced to 4 years and 6 months for breach of trust. Yang Li-Wei received a 1-year sentence with a 4-year suspended sentence, required to pay NT$5 million to the public treasury within one year of the verdict’s finalization, with illicit gains confiscated. Chan Shu-Ling was sentenced to 4 months for forgery of private documents, with a 2-year suspended sentence and a NT$100,000 payment to the treasury. Hu’s wife, Chuang Yu-Lin, and JKO Asset Management’s corporate director Chen Chih-Jui were acquitted. This is a first-instance ruling and may be appealed.