Posted on 04/29/2009 11:27:21 AM PDT by Lorianne
Whether the 16,000 local investors who had bought US$700 million in PEM Group products would get their money back remained uncertain yesterday ___ Taiwanese-American financier Danny Pang (彭日成), accused by US federal regulators of defrauding investors out of hundreds of millions of dollars, was arrested on Tuesday by the FBI on charges he withdrew about US$360,000 from a company account through dozens of small transactions so he would not have to report the sum to federal regulators.
The US attorney’s office said the founder and former chief executive of the Private Equity Management (PEM) Group was arrested at his lawyer’s office in Santa Ana, California.
The Securities and Exchange Commission filed a lawsuit on Friday against Pang and Private Equity Management Group LLC, accusing him of bilking investors by falsely portraying returns as coming from investments in timeshare real estate and seniors’ life insurance policies. Regulators say the money in fact came from a ponzi scheme in which he used funds raised from newer investors to pay earlier ones.
A federal court froze his assets and those of his two California companies, Private Equity Management Group Inc and Private Equity Management Group LLC. The judge also appointed a receiver responsible for safeguarding assets held by Pang’s firms.
Pang founded a US$4 billion investment firm and has lived lavishly in Newport Beach.
He was to spend the night in jail and face arraignment yesterday, prosecutors said. He faces a maximum of 10 years in federal prison if convicted of structuring the cash transactions.
About 16,000 Taiwanese investors purchased more than US$700 million in securities sold by the PEM Group, Financial Supervisory Commission (FSC) Chairman Sean Chen (陳沖) said yesterday.
The legislature’s Finance Committee later passed a resolution requiring the FSC to prohibit banks from selling foreign securities until an investigation into the PEM Group’s activities has been completed.
The FSC chief agreed to the temporary ban, but persuaded lawmakers to limit the restriction to sales of foreign investment products to individual clients so that companies could continue to buy foreign securities.
Chen said the FSC had approached an international agency for assistance in its investigation in the hope of minimizing the impact on Taiwanese investors.
The banks that sold PEM Group products have until tomorrow to file applications for assistance in protecting their clients’ rights, Chen said, but added that he was not certain whether investors would be able to get their money back.
“As long as their life insurance policies and other papers are valid, they will probably not lose their entire investment,” Chen told the Finance Committee.
He dismissed local media reports that as many as 20,000 investors had been affected.
Chen told the committee that the PEM Group had sold its products through six local banks: Standard Chartered Bank (渣打銀行), EnTie Commercial Bank (安泰銀行), Bank SinoPac (永豐銀行), Cosmos Bank (萬泰銀行), Hua Nan Commercial Bank (華南銀行) and Taichung Commercial Bank (台中商銀).
Standard Chartered sold about US$221 million in PEM Group securities, Hua Nan US$205 million, Bank SinoPac US$146 million, Taichung Bank US$70 million, EnTie Bank US$52 million and Cosmos Bank US$48 million, Chinese Nationalist Party (KMT) Legislator Alex Fai (費鴻泰) said.
Bank SinoPac said it would not rule out joining forces with other banks in seeking to claim compensation for their clients.
Standard Chartered Bank said late night it would repurchase all the PEM Group products it had sold at full face value plus accrued interest. This story has been viewed 345 times.
FBI Arrests Financier Pang in California
PEMGroup Ex-CEO’s Home Is Searched for Gold Bullion; Taiwan Moves to Protect Investors
http://online.wsj.com/article/SB124095772457365601.html
Madoff protégé????
No. He did this on his own. He’s originally from Taiwan and claimed he had an MBA as well as a top-level Morgan Stanley position. He’s got a beautiful trophy (second) wife; his fisrt wife was a not-so-elegant exotic dancer.
Like Madoff, he used his false claims as well as his affinity with fellow Chinese and Taiwanese (both groups speak Mandarin Chinese) to lure them to his Ponzi scheme.
Pang is currently out on $1M bail. These articles add more details in this story, which started with suspicion of Ponzi scheme of less than $250M and SEC civil lawsuit :
SEC Charges Pang With Fraud - WSJ, April 29, 2009
Highflying Financier Faces Questions Over Fund Empire 04/15/09
Pang Firm Left Some Big Funds Unaudited 04/16/09
China Business Leader Linked to Pang 04/17/09
Pang Steps Aside as Head of Firm 04/17/09
Taiwan Banks Probe PEMGroup Notes 04/23/09
The Unsolved Murder of Janie Louise Pang - WSJ, April 15, 2009
PEMGroup Founder Pang Arrested in California - Reuters, April 28, 2009
O.C. money manager is arrested on suspicion of evading currency reporting laws - LA Times, April 29, 2009 According to an affidavit, the FBI focused on a series of check-cashing transactions at the East West Bank branch in El Monte. Pang's aim was to convert cash to gold bullion, which he tucked away in a safe concealed in a bedroom closet, the affidavit said. Agents seized an undisclosed amount of gold during a search of Pang's Newport Beach home Tuesday, according to a law enforcement source who was not authorized to speak publicly. Federal authorities consider Pang a flight risk, and the charge used to make the arrest Tuesday may not be the last action in the case. The arrest was part of a continuing investigation, said U.S. attorney's spokesman Thom Mrozek. He declined to say whether additional charges would be brought or other suspects named. The Justice Department's criminal complaint alleges that Pang sought to hide more than $300,000 from the government by asking relatives and employees to cash a series of checks from accounts he controlled for amounts less than $10,000 to avoid filing transaction reports. Most of the checks were cashed by his personal assistant, the affidavit said. The 42-year-old Pang, who first made headlines more than a decade ago when his wife was shot to death in their upscale Villa Park home, was accused this week by the Securities and Exchange Commission of defrauding investors, most of them from Taiwan. ... Orange County money manager Danny Pang, accused this week of defrauding investors out of hundreds of millions of dollars, was arrested Tuesday by FBI agents on suspicion of evading currency reporting laws.
PEMGroup’s Danny Pang to Be Freed on $1 Million Bail - BL, April 29, 2009
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