A Canadian fraudster whose sham hair testing scheme ran through a dropbox in Dutchess County has been sentenced to 41 months in federal prison.
U.S. District Judge Kenneth M. Karas also ordered Kyle Tsui, 41, to forfeit $4.2 million, Sept. 17 in White Plains federal court.
Tsui had claimed that his Allergy Testing Company could detect a body’s tolerance or sensitivity to more than 400 foods and drinks and 400 non-food items such as pollens and detergents.
Customers paid $26 to $79 for tests and mailed their hair samples to a drop box at The Shipping Place in Hyde Park. Tsui told personnel there to throw away the hair and forward the paperwork to him in Ontario, Canada. Then he sent false reports telling customers what to avoid and what to use.
He sold about $5.9 million in phony tests to more than 80,000 people during eight months spanning 2018 and 2019.
The feds were on to him as early as June 2019, filing a sealed complaint in U.S. District Court. But he was not found until September 2023 when he was vacationing in Spain with his family.
He was extradited to the U.S. He pleaded guilty to mail fraud and wire fraud. He has been jailed ever since.
The U.S. Probation Office calculated a sentencing guideline of 51 to 63 months.
Tsui’s attorneys, Jeffrey Lichtman and Jeffrey Einhorn, recommended time served.
Tsui did not contest extradition, they noted in a letter to judge Karas. He promptly admitted his guilt. He has already paid $3.6 million towards the forfeiture penalty. Â As a foreign national, he is ineligible for a less restrictive prison or for a halfway house near the end of his term. And when he is released from custody he will be detained by immigration authorities until he is deported.
His attorneys said 20 letters from friends and family members depict a life of good deeds and indicate that his chances for rehabilitation are good.
“Kyle Tsui comes before this court asking for mercy,” they stated. “A life filled with good deeds and exceptionally hard work has been marred by his criminal actions.
“Nevertheless … Mr. Tsui is a decent and uncommonly giving man who unlike many defendants has made efforts to help friends, family members and neighbors throughout his life, when no one was watching (and) when he had no need to impress a judge deciding his fate.”
Assistant prosecutors Qais Ghafary and Benjamin Levander recommended 41 month in prison.
When U.S. postal inspectors interviewed him in 2019, he lied about testing hair samples. A few weeks later, he transferred $3.7 million from a U.S. bank to a Canadian bank “in an effort to evade law enforcement.”
While it is commendable that he has since paid $3.6 million of the forfeiture order, the prosecutors said, that was a condition of his plea deal.
They said imprisonment is appropriate because the fake test results not only told customers what to avoid but also which foods they could consume and which environmental factors they could be exposed to.
“The seriousness of the defendant’s fraud cannot be understated,” they said. He “posed a direct and serious safety risk because victims were told they could or should consume foods or seek out environmental factors that, in reality, could have been harmful.”
