SEC v. Si Chan Wooh, District of Oregon (June 29, 2007) — Complaint

Jun 29 2007 9:40RM THE UPS STORE 3604 5032222002  
*  
HELANE L. MOWSON (Admitted in California)  
[email protected]  
MARC J. FAGEL (Admitted in California)  
[email protected]  
TRACY L.DAVIS (Admitted in California)  
DavisT-sec .gov  
XAVIER CARLOS VASQUEZ(Admitted in California)  
[email protected]  
44 Montgomery Street, Suite 2600  
San Francisco, CA 94104  
Telephone: (41 5) 705-2500  
Facsimile: (415) 705-2501  
Attorneys forPlaintiff  
SECIJFUTES AND EXCHANGE COMMISSION  
UNITED STATES DISTIUCT COURT 
DISTRICT OF OREGON 
SECURITIES AND EXCHANGE CV. 
COMMISSION, 
CV307-957 
Plaintiff, 
COMPLAINT 
..-...... -. SX.C:X_tG_RI.W.Q-BW,-_--........ -. ....... -... .-........... ..... - -.. ........  
Defendant. 
Plaintiff Securities and Exchange Commission (the "Cornrnission") alleges: 
SUMMARY OF THE ACTION 
1. This matter involves violations ofthe Foreign Corrupt Practices Act of 1977 
("FCPA") by defendant Si Chan Wooh, a former executive at Schnitzer Steel Industries 
COMPLAINT 
I I I 

("Schnitzer"), an Oregon-based steel company that sells scrap metal. From at least 1999 
through 2004, Schnitzer paid more than $1.9 million in bribes to managers of steel mills 
in China and South Korea to induce them to purchase scrap metal fiom Schnitzer. 
Defendant Wooh, former Executive Vice President and head of SSI International, Inc., a 
Schnitzer subsidiary, offered and paid bribes and aided and abetted Schnitzer's failure to 
maintain accurate books and records relating to the payments. 
2. As a result of these payments, Wooh received bonus compensation from 
Schnitzer totaling nearly $15,000. The Commission seeks a court order requiring that 
Wooh disgorge his improper compensation, plus prejudgment interest; pay a civil 
monetary penalty; and be enjoined fiom future violations of the FCPA. 
JURISDICTION 
3. This Court has jurisdiction over this action pursuant to Sections 2 1 (d)(l) and 
27 of the Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. 
$5 78u(d)(l) 
and 78aal. Defendant has, directly or indirectly, made use of the means and 
instrumentalities of interstate commerce and the mails in connection with the acts, 
transactions, practices and courses of business alleged in this Complaint. 
4. The Commission brings this action pursuant to Sections 21(d) and 21(e) of the 
Exchange Act [15 U.S.C. 
$5 78u(d) and 78u(e)]. 
DEFENDANT 
5. Wooh, age 52, resides in Tacoma, Washington. From February 2000 until 
October 2004, Wooh was the Executive Vice President and head of SSI International, 
Inc., a Schnitzer subsidiary based in the United States that assisted in Schnitzer's sales in 
2 COMPLAINT 

Asia. Wooh then served as SSI International's President from October 2004 to 
September 2006. Wooh worked at Schnitzer's facilities in Tacoma, and reported directly 
to a senior executive at  Schnitzer during the relevant time period. Schnitzer terminated 
Wooh's employment in September 2006. 
OTHER RELEVANT ENTITY 
6. Schnitzer is incorporated in Oregon and headquartered in Portland, Oregon. 
Schnitzer operates three business segments that include a steel manufacturer, a metals 
recycling business and an auto parts business. At the time of the conduct described 
below, Schnitzer's common stock was registered with the Commission pursuant to 
Section 12(g) of the Exchange Act [15 U.S.C. 
5 781(g)] and was listed on the NASDAQ 
National Market. 
In addition, Schnitzer filed quarterly and annual reports with the 
Commission pursuant to Section 13 of the Exchange Act [15 U.S.C. 
5 78ml. 
FACTS 
A. Background 
7. The Foreign Corrupt Practices Act prohibits any company that issues securities 
to the public from offering a bribe (i.e., cash or anything else of value) to a foreign 
officlaLto-persuade-thatofficialtwuse-kl-s-influence to assist-the company in-obtaining- or 
----
retaining business. In addition, the FCPA requires that public companies keep books and 
records that accurately reflect their operations, and that they put in place internal controls 
that are reasonably designed to ensure that their books and records are accurate. 
B. Sales to Government-Owned Steel Mills in China 
8. From at least 1999 through 2004, defendant Wooh violated the anti-bribery 
provisions of the FCPA by causing Schnitzer to pay approximately $205,000 in bribes to 
COMPLAINT 

managers of steel mills in China that were owned, in whole or part, by the Chinese  
government. The purpose of the payments was to induce the managers to purchase scrap  
metal from Schnitzer. Because the mills were at least partially government-owned, the  
managers were foreign officials within the meaning of the FCPA, and the payments were  
improper.  
9. Schnitzer paid two types of bribes, or kickbacks, to the managers. For the first  
type, Schnitzer paid a "standard" kickback, which was generally $3,000 to $6,000 per  
shipment. Schnitzer paid these kickbacks out of the revenue it earned on the scrap metal  
sale. For the second type, Schnitzer participated in a scheme in which the manager of a  
steel mill would cause the steel mill to overpay Schnitzer for the steel purchase. The  
manager would then recover the "overpayment" from Schnitzer, in amounts ranging from  
$3,000 to $15,000 per shipment.  
10. Wooh requested that Schnitzer wire the money for both types of kickbacks to  
secret bank accounts in South Korea opened by another SSI employee specifically for  
this purpose. Wooh and this employee would then use fimds from the secret accounts to  
make improper cash payments to managers of Schnitzer's customers. In addition to the  
-cash payments, Wooh-and-the employee gave gifts to-the managers-ofthe government-- 
-----------
owned customers to induce the managers to purchase scrap metal from Schnitzer. 
11. From at least 1999 through 2004, Wooh paid over $205,000 in bribes to  
managers of Schnitzer's government-owned customers in China in connection with 30  
sales transactions. Schnitzer's gross revenue for the transactions totaled approximately  
$96 million, 'and Schnitzer earned approximately $6.3 million in net profits on the sales.  
COMPLAINT 

12. Based on the revenue that Schnitzer realized from the bribes to foreign  
officials, described above, Wooh received bonus compensation of $14,8 19.38.  
C. Sales to Privately-Owned Steel Mills in China and South Korea 
13. Also from at least 1999. through 2004, Wooh caused Schnitzer to pay  
approximately $1.7 million in bribes to managers of privately-owned steel mills in China  
and South Korea. These mills were privately-owned and the managers were not foreign  
officials. However, Schnitzer violated the FCPA by failing to properly account for and  
disclose the bribes in its internal records and public filings.  
14. 
In China, Schnitzer paid approximately $420,000 in such bribes, in  
transactions that produced approximately $214 million in gross revenue for the company.  
In South Korea, Schnitzer paid approximately $1.3 million in such bribes, in transactions  
that produced approximately $290 million in gross revenue. Wooh and another employee  
also provided non-cash gifts to general managers of South Korean customers.  
D. Schnitzer's Investigation and Subsequent Events 
15. In May 2004, Si Wooh disclosed to Schnitzer's compliance department the  
fact he made payments as described above. Based on this information, Schnitzer began  
----to investigate-thepotentiaLFCPA-violationsS-Evenafter disc10singthispracticeteth~'--------------
compliance department, Wooh made two additional payments to managers in South 
Korea; a senior Schnitzer executive authorized the payments 
in order to satisfy 
outstanding agreements. 
16. Around the same time as his discussions with Schnitzer's compliance  
department, Wooh authorized SSI employees in South Korea to destroy documents  
concerning the improper payments to foreign officials and general managers of private  
COMPLAINT 

steel mills. Wooh's conduct contributed to Schnitzer's failure to keep accurate and 
required books and records in violation of the FCPA. 
FIRST CLAIM 
Violations of Section 30A of the Exchange Act  
(Anti-bribery provision of the Foreip Corrupt Practices Act)  
' 
17. Paragraphs 1 through 16 are re-alleged and incorporated by reference. 
. 
18. Wooh made payments, through money and gifts, to foreign officials for the 
purpose of influencing their official acts and decisions and inducing them to use their 
influence to assist Schnitzer in obtaining or retaining business with foreign steel mills. 
Throughout the relevant period, the recipients of these offers and payments were foreign 
officials within the meaning of the FCPA, 
and the relevant foreign steel mills were 
instrumentalities of foreign governments within the meaning of the FCPA. 
19. By reason of the foregoing, Wooh violated the illegal offers and payments 
provisions of the FCPA, codified as Section 30A of the Exchange Act [15 U.S.C. 
SECOND CLAIM 
Aiding and Abetting Violations of Section1 3(b)(2)(A) of the Exchange Act 
-_ --_ -__ _ ----_ _ ---------(Baohxand Reco~ds) 
20. Paragraphs 1 through 16 are re-alleged and incorporated by reference. 
21. With respect to the offers and payments described above, Schnitzer failed to 
make and keep books, records and accounts which, in reasonable detail, accurately and 
fairly reflected its transactions and dispositions of its assets, in violation of Section 
. 
13(b)(2)(A) of the Exchange Act [15 U.S.C. 5 78m(b)(2)(A)]. 
22. Wooh, knowingly or recklessly provided substantial assistance to Schnitzer's 
violation of Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. 
5 78m(b)(2)(A)]. 
6 COMPLAINT 

23. By reason of the foregoing, Wooh aided and abetted Schnitzer's failure to 
make and keep books, records and accounts which, in reasonable detail, accurately and 
fairly reflected its transactions and dispositions of its assets, in violation of Section 
13(b)(2)(A) of the Exchange Act 115 U.S.C. 
5 78m(b)(2)(A)]. 
PRAYER FOR RELIEF 
WHEREFORE, the Commission respectfully requests that the Court: 
1. Permanently enjoin Wooh and his agents, servants, employees, attorneys, and 
all persons in active concert or participation with them who receive actual notice of the 
judgment by personal service or otherwise from directly or indirectly violating, or aiding 
and abetting violations of, Sections 30A and 13(b)(2)(A) of the Exchange Act; 
2. Order Wooh to disgorge all wrongfully obtained benefits, plus prejudgment 
interest; 
3. Order Wooh to pay civil penalties under Sections 21(d) and 32(d) of the 
Exchange Act [15 U.S.C. 
$5 78u(d) and78ffl; 
4. Retain jurisdiction of this action in accordance with the principles of equity and 
the Federal Rules of Civil Procedure in order to implement and carry out the terms of all 
- --orders and-decrees that-may be entered, or to entertain any suitable applicationor motion 
for additional relief within the jurisdiction of this Court; and 
COMPLAINT  

5. Grant such other and further relief as the Court may deem just,  equitable, and 
appropriate. 
Dated: June 
27,2007 
Respectfully submitted, 
By: 
Marc J.  Fagel 
Tracy 
L. Davis 
Xavier Carlos vasqUez 
Attorneys for Plaintiff 
SECURITIES 
AND EXCHANGE 
COMMISSION 
COMPLAINT 

J u n  29 2007 9:40RM THE UPS STORE 3604  5032222002  
*  

HELANE L. MOWSON (Admitted in California)  
[email protected]  

MARC J. FAGEL (Admitted in California)  
[email protected]  

TRACY L.DAVIS (Admitted in California)  
DavisT-sec .gov  

XAVIER CARLOS VASQUEZ (Admitted in California)  
[email protected]  

44 Montgomery Street, Suite 2600  
San Francisco, CA 94104  
Telephone: (41 5 )  705-2500  
Facsimile: (415 )  705-2501  

Attorneys forPlaintiff  
SECIJFUTES AND EXCHANGE COMMISSION  

UNITED STATES DISTIUCT COURT 

DISTRICT OF OREGON 

SECURITIES AND EXCHANGE CV. 
COMMISSION, CV307- 9 5 7  

Plaintiff, 

COMPLAINT 
. .-...... -. SX.C:X_tG_RI.W.Q-BW,- _--. . . . . . . .  - . . . . . . . .  - ... . -........... . . . . .  - - . .  ........  

Defendant. 

Plaintiff Securities and Exchange Commission (the "Cornrnission") alleges: 

SUMMARY OF THE ACTION 

1. This matter involves violations ofthe Foreign Corrupt Practices Act of 1977 

("FCPA") by defendant Si Chan Wooh, a former executive at Schnitzer Steel Industries 

COMPLAINT 

I I I 



("Schnitzer"), an Oregon-based steel company that sells scrap metal. From at least 1999 

through 2004, Schnitzer paid more than $1.9 million in bribes to managers of steel mills 

in China and South Korea to induce them to purchase scrap metal fiom Schnitzer. 

Defendant Wooh, former Executive Vice President and head of SSI International, Inc., a 

Schnitzer subsidiary, offered and paid bribes and aided and abetted Schnitzer's failure to 

maintain accurate books and records relating to the payments. 

2. As a result of these payments, Wooh received bonus compensation from 

Schnitzer totaling nearly $15,000. The Commission seeks a court order requiring that 

Wooh disgorge his improper compensation, plus prejudgment interest; pay a civil 

monetary penalty; and be enjoined fiom future violations of the FCPA. 

JURISDICTION 

3. This Court has jurisdiction over this action pursuant to Sections 2 1 (d)(l) and 

27 of the Securities Exchange Act of 1934 (the "Exchange Act") [15 U.S.C. $ 5  78u(d)(l) 

and 78aal. Defendant has, directly or indirectly, made use of the means and 

instrumentalities of interstate commerce and the mails in connection with the acts, 

transactions, practices and courses of business alleged in this Complaint. 

4. The Commission brings this action pursuant to Sections 21(d) and 21(e) of the 

Exchange Act [15 U.S.C. $5 78u(d) and 78u(e)]. 

DEFENDANT 

5. Wooh, age 52, resides in Tacoma, Washington. From February 2000 until 

October 2004, Wooh was the Executive Vice President and head of SSI International, 

Inc., a Schnitzer subsidiary based in the United States that assisted in Schnitzer's sales in 

2 COMPLAINT 



Asia. Wooh then served as SSI International's President from October 2004 to 

September 2006. Wooh worked at Schnitzer's facilities in Tacoma, and reported directly 

to a senior executive at Schnitzer during the relevant time period. Schnitzer terminated 

Wooh's employment in September 2006. 

OTHER RELEVANT ENTITY 

6. Schnitzer is incorporated in Oregon and headquartered in Portland, Oregon. 

Schnitzer operates three business segments that include a steel manufacturer, a metals 

recycling business and an auto parts business. At the time of the conduct described 

below, Schnitzer's common stock was registered with the Commission pursuant to 

Section 12(g) of the Exchange Act [15 U.S.C. 5 781(g)] and was listed on the NASDAQ 

National Market. In addition, Schnitzer filed quarterly and annual reports with the 

Commission pursuant to Section 13 of the Exchange Act [15 U.S.C. 5 78ml. 

FACTS 

A. Background 

7. The Foreign Corrupt Practices Act prohibits any company that issues securities 

to the public from offering a bribe (i.e., cash or anything else of value) to a foreign 

officlaLto-persuade-thatofficialtwuse-kl-s-influence to assist-the company in-obtaining- or - - - -

retaining business. In addition, the FCPA requires that public companies keep books and 

records that accurately reflect their operations, and that they put in place internal controls 

that are reasonably designed to ensure that their books and records are accurate. 

B. Sales to Government-Owned Steel Mills in China 

8. From at least 1999 through 2004, defendant Wooh violated the anti-bribery 

provisions of the FCPA by causing Schnitzer to pay approximately $205,000 in bribes to 

COMPLAINT 



managers of steel mills in China that were owned, in whole or part, by the Chinese  

government. The purpose of the payments was to induce the managers to purchase scrap  

metal from Schnitzer. Because the mills were at least partially government-owned, the  

managers were foreign officials within the meaning of the FCPA, and the payments were  

improper.  

9. Schnitzer paid two types of bribes, or kickbacks, to the managers. For the first  

type, Schnitzer paid a "standard" kickback, which was generally $3,000 to $6,000 per  

shipment. Schnitzer paid these kickbacks out of the revenue it earned on the scrap metal  

sale. For the second type, Schnitzer participated in a scheme in which the manager of a  

steel mill would cause the steel mill to overpay Schnitzer for the steel purchase. The  

manager would then recover the "overpayment" from Schnitzer, in amounts ranging from  

$3,000 to $15,000 per shipment.  

10. Wooh requested that Schnitzer wire the money for both types of kickbacks to  

secret bank accounts in South Korea opened by another SSI employee specifically for  

this purpose. Wooh and this employee would then use fimds from the secret accounts to  

make improper cash payments to managers of Schnitzer's customers. In addition to the  

- cash payments, Wooh-and-the employee gave gifts to-the managers-ofthe government-- - - - -- -- - -- -

owned customers to induce the managers to purchase scrap metal from Schnitzer. 

11. From at least 1999 through 2004, Wooh paid over $205,000 in bribes to  

managers of Schnitzer's government-owned customers in China in connection with 30  

sales transactions. Schnitzer's gross revenue for the transactions totaled approximately  

$96 million, 'and Schnitzer earned approximately $6.3 million in net profits on the sales.  

COMPLAINT 



12. Based on the revenue that Schnitzer realized from the bribes to foreign  

officials, described above, Wooh received bonus compensation of $14,8 19.38.  

C. Sales to Privately-Owned Steel Mills in China and South Korea 

13. Also from at least 1999. through 2004, Wooh caused Schnitzer to pay  

approximately $1.7 million in bribes to managers of privately-owned steel mills in China  

and South Korea. These mills were privately-owned and the managers were not foreign  

officials. However, Schnitzer violated the FCPA by failing to properly account for and  

disclose the bribes in its internal records and public filings.  

14. In China, Schnitzer paid approximately $420,000 in such bribes, in  

transactions that produced approximately $214 million in gross revenue for the company.  

In South Korea, Schnitzer paid approximately $1.3 million in such bribes, in transactions  

that produced approximately $290 million in gross revenue. Wooh and another employee  

also provided non-cash gifts to general managers of South Korean customers.  

D. Schnitzer's Investigation and Subsequent Events 

15. In May 2004, Si Wooh disclosed to Schnitzer's compliance department the  

fact he made payments as described above. Based on this information, Schnitzer began  

- --- to investigate-thepotentiaLFCPA-violationsS-Evenafter disc10singthispracticeteth~'- - ------ - - - - - -

compliance department, Wooh made two additional payments to managers in South 

Korea; a senior Schnitzer executive authorized the payments in order to satisfy 

outstanding agreements. 

16. Around the same time as his discussions with Schnitzer's compliance  

department, Wooh authorized SSI employees in South Korea to destroy documents  

concerning the improper payments to foreign officials and general managers of private  

COMPLAINT 



steel mills. Wooh's conduct contributed to Schnitzer's failure to keep accurate and 

required books and records in violation of the FCPA. 

FIRST CLAIM 

Violations of Section 30A of the Exchange Act  
(Anti-bribery provision of the Foreip Corrupt Practices Act)  

' 17. Paragraphs 1 through 16 are re-alleged and incorporated by reference. . 

18. Wooh made payments, through money and gifts, to foreign officials for the 

purpose of influencing their official acts and decisions and inducing them to use their 

influence to assist Schnitzer in obtaining or retaining business with foreign steel mills. 

Throughout the relevant period, the recipients of these offers and payments were foreign 

officials within the meaning of the FCPA, and the relevant foreign steel mills were 

instrumentalities of foreign governments within the meaning of the FCPA. 

19. By reason of the foregoing, Wooh violated the illegal offers and payments 

provisions of the FCPA, codified as Section 30A of the Exchange Act [15 U.S.C. 

SECOND CLAIM 

Aiding and Abetting Violations of Section1 3(b)(2)(A) of the Exchange Act 
-_ - - _ - _ _  _ - - - - _ _ --- -- ----(Baohxand Reco~ds) 

20. Paragraphs 1 through 16 are re-alleged and incorporated by reference. 

21. With respect to the offers and payments described above, Schnitzer failed to 

make and keep books, records and accounts which, in reasonable detail, accurately and 

fairly reflected its transactions and dispositions of its assets, in violation of Section . 

13(b)(2)(A) of the Exchange Act [15 U.S.C. 5 78m(b)(2)(A)]. 

22. Wooh, knowingly or recklessly provided substantial assistance to Schnitzer's 

violation of Section 13(b)(2)(A) of the Exchange Act [15 U.S.C. 5 78m(b)(2)(A)]. 

6 COMPLAINT 



23. By reason of the foregoing, Wooh aided and abetted Schnitzer's failure to 

make and keep books, records and accounts which, in reasonable detail, accurately and 

fairly reflected its transactions and dispositions of its assets, in violation of Section 

13(b)(2)(A) of the Exchange Act 115 U.S.C. 5 78m(b)(2)(A)]. 

PRAYER FOR RELIEF 

WHEREFORE, the Commission respectfully requests that the Court: 

1. Permanently enjoin Wooh and his agents, servants, employees, attorneys, and 

all persons in active concert or participation with them who receive actual notice of the 

judgment by personal service or otherwise from directly or indirectly violating, or aiding 

and abetting violations of, Sections 30A and 13(b)(2)(A) of the Exchange Act; 

2. Order Wooh to disgorge all wrongfully obtained benefits, plus prejudgment 

interest; 

3. Order Wooh to pay civil penalties under Sections 21(d) and 32(d) of the 

Exchange Act [15 U.S.C. $5 78u(d) and78ffl; 

4. Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of all 

- --orders and-decrees that-may be entered, or to entertain any suitable applicationor motion 

for additional relief within the jurisdiction of this Court; and 

COMPLAINT  



5. Grant such other and further relief as the Court may deem just, equitable, and 

appropriate. 

Dated: June 27,2007 
Respectfully submitted, 

By: 

Marc J. Fagel 
Tracy L. Davis 
Xavier Carlos vasqUez 

Attorneys for Plaintiff 
SECURITIES AND EXCHANGE 
COMMISSION 

COMPLAINT