Legal News

SEC Files Fraud Charges Against Danny Pang

By Ashby Jones

Another day, another financier in hot water.

The latest to find himself at the butt-end of a government lawsuit: Danny Pang, who ran two businesses based in Irvine, Calif., Private Equity Management Group Inc. and Private Equity Management Group LLC. The Securities and Exchange Commission on Monday filed a civil lawsuit in Los Angeles federal court, alleging that Pang defrauded investors of hundreds of millions of dollars. Click here for the WSJ story; here for the LA Times story; here for the SEC complaint.

As part of the suit, federal district court judge Philip Gutierrez froze the assets of Pang and his businesses and appointed a receiver to safeguard the existing assets.

Pang’s investment practices came to light in this page-one article from earlier this month.

The SEC alleged Pang’s Ponzi-like fraud scheme began at least in 2003 when he raised hundreds of millions of dollars from investors, mostly in Taiwan. Pang sold investors securities and told them he would earn enough profit to pay them returns through purchasing life-insurance policies at a discount, the SEC said. In truth, the SEC alleged, the life-insurance policies didn’t generate enough profit to cover the cost of the premiums or meet the returns he promised to investors. PEMGroup instead paid investors from new money that was supposed to be invested in time-shares, the SEC said.

Latham & Watkins’s David Schindler, an attorney for Pang, said his client expects to be fully vindicated. He said Mr. Pang voluntarily returned to the U.S. more than a week ago to cooperate with PEMGroup’s internal probe and is committed to saving the company.

A company spokesman had no immediate comment on the SEC allegations.

For another chapter in the Danny Pang story, click here for the strange tale of his wife’s murder back in 1997. A former stripper, Janie Pang was killed in the bedroom of the couple’s upscale home in Villa Park in Orange County. Newport Beach lawyer Hugh “Randy” McDonald was charged with murdering Pang’s wife, but his trial ended with a hung jury.

Full post as published by Law Blog - WSJ.com on April 28, 2009 (boomark / email).