Tuesday, April 28, 2009

defrauded investors out of hundreds of millions of dollars

TO BE NOTED: From the NY Times:

"S.E.C. Charges California Money Manager With Fraud

The Securities and Exchange Commission has temporarily frozen assets controlled by Danny Pang, a money manager in Newport Beach, Calif., who the agency contends defrauded investors out of hundreds of millions of dollars in a scheme that began in 2003.

In its complaint on Monday, the S.E.C. said Mr. Pang, who ran an investment firm called the Private Equity Management Group, or the PEM Group, lied to his clients about the value of investments he made in life insurance policies and real estate timeshares. He promised investors steady returns of 5.25 percent to 7 percent annually from buying life insurance policies at a discount from elderly people, but he was ultimately unable to pay the premiums, investigators said.

Mr. Pang began using money raised from future clients, who invested in the real estate timeshares, to pay out purported profits to other investors, the S.E.C. alleged.

When investors raised questions about the value of one particular insurance policy, Mr. Pang ordered that its documents be altered to reflect a value of $107 million on the policy instead of the true $31 million value, according to the S.E.C. complaint.

The S.E.C. also charged that Mr. Pang raised money, mostly from Taiwanese investors, by claiming he was a former senior vice president and technology merger adviser at Morgan Stanley and had an advanced business degree from the University of California at Irvine. Both claims were false, according to the complaint.

A federal judge granted the S.E.C.’s request for emergency relief for investors including the appointment of a receiver to safeguard the assets of the Private Equity Management Group. Mr. Pang was also required to turn over all of his passports and repatriate money that was sent overseas.

It’s unclear if Mr. Pang, 42, is in the United States or not. He stepped aside as chief executive a few weeks ago pending an internal investigation into allegations of fraud by several Taiwanese banks. The S.E.C. said its investigation is continuing.

A spokesman for the Private Equity Management Group declined to comment on the case.

– Zachery Kouwe"

No comments: