Legal News

Receiver: All is Not Well at Danny Pang?s PEMGroup

By Ashby Jones

Jeez, that didn’t take long. Just weeks after the Securities & Exchange Commission filed a civil suit against Irvine, Calif.-based money manager Danny Pang and his investment firm, PEMGroup, a court-appointed receiver has ripped Pang, accusing Pang of running the firm like a “personal piggy bank.” The receiver also claimed that the fund had a shortfall of between $400 million and $600 million.

The receiver, Robert Mosier, alleged in a federal court filing that more than $80 million in questionable personal and business expenses were financed by the firm’s investors, including a recent $1 million Disney cruise for the entire staff, the purchase of several jets and $6.9 million in undocumented loans to Pang. Click here for the WSJ story; here for the LA Times story; here for the receiver’s filing; here for a LB post on the SEC suit; and here for the initial WSJ story on Pang, from April 15.

Separately, the Securities and Exchange Commission added more details to its earlier allegations against Pang and his firm, saying in a court filing Thursday that new testimony from insiders provided more evidence the firm operated a “Ponzi-like scheme” and “routinely used funds from new investors to pay returns to existing investors.”

Pang, 42 years old, has denied wrongdoing and is contesting the seizure of his firm as unjust. In a statement, a spokesman for Mr. Pang said the receiver was appointed to provide an unbiased accounting of PEMGroup, but had instead exceeded his role by “choosing apparently to act as prosecutor, judge and jury.”

Pang is represented by Latham’s David Schindler; lawyers from the LA office of DLA Piper are repping Mosier.

Full post as published by Law Blog - WSJ.com on May 08, 2009 (boomark / email).