Restaurant Owner Suspected In Credit Card Scheme

Feb. 1 - KGO - Our advice: Check your credit card statements carefully. It's always a good idea, but especially for anyone who's eaten at a certain Chinese restaurant in San Francisco in recent years.



We've uncovered many scams over the years, but the experts say this goes beyond a scam, that it's an out-and-out crime.

When we met 50-year-old Phau Lam, he took off and kept running and running, until he was out of sight. We know why.

Irene Bartholomew, Victim: "It's a scam. It's a crime and he has to be in jail. That's it. He has to be in jail."

Irene Bartholomew used to have lunch at Lam's Home Menu restaurant on Mission at South Van Ness, before it closed almost a year ago. She was shocked when she checked her bank statement recently and found a new charge for $175 dollars.

She went to the restaurant -- still closed -- and confronted Lam.

Irene Bartholomew: "'Why I was charged $175 dollars for just lunch, you know, a rice plate meal, you know.' And he goes, 'Oh, can you come back, my friend, tomorrow at about 12 o'clock at this time?' I go, 'Okay, I'll come back.'"

And she brought the I-Team with her.

ABC7's Dan Noyes: "What's going on here? What happened?"

Phau Lam, Restaurant Owner: "I don't know."

Dan Noyes: "Why did you bill her ATM card?"

Phau Lam: "I don't bill that."

Dan Noyes: "You didn't bill that, well, who did?"

Phau Lam: "No, I don't know."

Dan Noyes: "Oh, come on."

Phau Lam: "No, I don't want to take a picture."

Phau Lam didn't want to answer any questions about his business. He led us through the back of the restaurant and out the loading dock.

Dan Noyes: "You aren't even selling food and you're billing their credit card? Mr. Lam."

He took off and kept running. On few occasions have we seen someone run so far from our cameras. Lam left the doors to his restaurant wide open. It's clear he was not ready for business -- we found no food on the shelves. But two cash registers and three credit card machines were powered up and ready for action.

We found several receipts for credit card charges dated long after the business had shut down -- one for $800 dollars.

Pat Wallace, Better Business Bureau: "This isn't even a scam. I don't even call this a scam. This is just out and out theft."

Pat Wallace of the Better Business Bureau has received several complaints about Lam charging his former customers' credit cards, months after the restaurant closed.

Pat Wallace: "We found that he not only charged once, but two and three times to the same card. So, I guess he ran through his, all of his credit card records and then started over again at the beginning."

Naveen Nathan had his card charged four times since the restaurant closed, for more than $800 dollars.

Naveen Nathan, Victim: "And the credit card company finally said that there's no way that we can stop these guys charging you. Rather you report this as stolen or lost and we could stop the number and we can issue a new number."

In all, we tracked down 15 people who say they've had fraudulent charges from Home Menu or another restaurant Lam's preparing to open, Asia Taste. All of the bills are for much more than you would expect to pay for a meal at a Chinese restaurant -- $145, $218, $475, up to $935 dollars.

Van Dyke Roth, Victim: "Had he been successful it would have totaled, you know, easily, I don't know, $1,200 dollars or so."

One thing we wondered was why -- why would someone think they could get away with this? And what kind of pressures would drive them to take such risks?

Bank records show that someone using Phau Lam's machines tried six times to charge Van Dyke Roth's credit card, but didn't have the correct expiration date. They finally entered the right date at four o'clock one morning -- the charge went through for $125 dollars.

Van Dyke Roth: "How can someone do that? Just how can someone do that? You're still affecting lives even though it's just a bunch of numbers that you're running through a machine."

We may have found the answer in Phau Lam's court records. In them, a picture emerges of a man with serious legal problems and money troubles. He's been sued at least 16 times in the last 15 years by restaurant vendors, car companies, the government and former business partners.

Shun Lui, Lam's Former Business Partner: "It was $180,000 dollars, we lost."

Shun Lui and his brother, Roy, loaned Lam almost $180,000 dollars to help open his restaurant. What's more, they say Lam ran up tens of thousands of dollars in unauthorized charges on Shun's credit card. So, they sued and a judge awarded more than $200,000 dollars in damages, finding Lam "guilty of actual fraud."

Shun Lui: "Even a penny, he don't pay back."

Another of Lam's partners even filed a police report in 2004, again, for charging customers' debit and credit cards after they dined at the restaurant.

Agatha Okuda got charged $850 dollars.

Agatha Okuda, Victim: "He just kept giving me the run-around, and call back tomorrow, and we'll get in touch with our bank, yeah."

Dan Noyes: "Eight-hundred-fifty bucks, for how much of a lunch?"

Agatha Okuda: "Seventeen dollars (laughs)."

She can laugh about it now. Agatha Okuda's bank finally credited her account. Next stop for us, the authorities. Tomorrow at 6 p.m., we take the case to the San Francisco District Attorney's Office.

By the way, we've tried several times to get some explanation from Phau Lam and his attorneys for what he's done -- no luck