BY BRIAN T. MURRAY
Star-Ledger Staff

A West New York businessman pleaded guilty in federal court in Newark yesterday to embezzling $1 million to $2.5 million from Samsung America in Ridgefield Park, a trading and investment subsidiary of the Korean conglomerate Samsung Corp.

John Y. Lee, 44, also known as Yong Kook Lee, faces up to 20 years in prison when he is sentenced Oct. 6 on charges of wire fraud and filing false income tax returns. Lee told U.S. District Judge Susan D. Wigenton that while he was director of Samsung America's Korea Export Department, he embezzled funds from 2000 until 2007 using a phony company he set up to bill Samsung for metal refining services that were never provided.

He pulled off the scheme by giving his phony company a name similar to that of an Iselin firm that had had legitimate business agreements and dealings with another Samsung subsidiary. By submitting phony invoices, purchase orders and payment applications to the Bergen County-based Samsung America, Lee was able to trick the company into wiring money directly to a bank account he controlled in Summit, federal authorities said.

Lee covered up the fraud by sending false documents to Samsung America's accounting department, making it appear that Samsung America had received the phony metal refining services reflected in the phony billings, according to Assistant U.S. Attorney Justin W. Arnold, who handled the case.

Lee was freed on a $500,000 bond until his sentencing. He faces additional financial penalties of up to $500,000.

According to a seven-page federal information to which Lee pleaded guilty, he began his scam in September 2000 by creating a phony company he called Engelhard Supple Co. in West New York. The intent, said federal authorities, was for it to be confused with Engelhard Corp. of Iselin.

In the 1990s, Engelhard Corp. had legitimately provided metal refining services to Samsung Corning Inc. of Seoul, South Korea, which is a joint venture between Samsung America and Corning Inc. of New York.

Samsung Corning developed flat-screen technologies and specialized glass for flat-screen products. At the time, the Ridgefield Park-based Samsung America would pay all bills received from Engelhard Corp. and wait for reimbursement from the overseas-based Samsung Corning -- a practice that enabled Lee to further his scheme years later, according to federal documents.