OSC probing alleged US$60M Ponzi scheme
National Post
By Barbara Shecter, Financial Post March 26, 2009 8:01
Signage on glass wall panels adjacent to OSC reception area on the 17th floor of 20 Queen St. West in Toronto.Photograph by: Peter Redman/National Post, Peter Redman/National Post
The Ontario Securities Commission is probing an alleged US$60-million Ponzi scheme in which a man nicknamed the “Chinese Warren Buffett” is alleged to have paid purported profits by raising money from fresh investments.
The regulator alleges Weizhen Tang was the “operating mind” of the scheme that had promised to pay investors weekly profits of 1% through investments in stocks, options, futures, and mutual funds through stock markets in the United States, China and Hong Kong.
Among the allegations contained in documents filed by the OSC to obtain a freeze on Tang’s Oversea Chinese Fund LP, the commission said that “on the evidence presently available it would appear that almost all of the funds have been dissipated.”
In an affidavit filed with the Ontario Superior Court of Justice in Toronto, senior OSC investigator Jeffrey Thomson says Mr. Tang admitted to regulators that he lost US$15-million last year, which he did not report to investors, all of which made minimum investments of US$150,000.
The documents further allege that one investor was provided a “fabricated” statement indicating a balance of more than US$1-million, which was in reality “an estimate of what was promised to this investor for his investment in Oversea.”
Hugh Lissaman, Mr. Tang’s lawyer, said his client “is co-operating fully” with regulators and to date there have been no charges of fraud laid.
“My understanding is that the OSC has issued various cease-trade orders and that an investigation is pending,” said Mr. Lissaman in an e-mail.
Mr. Thomson, the OSC investigator, said in his affidavit that during a March 12 interview at the commission’s offices Mr. Tang “stated that the balances set out in account statements … are the amounts promised by Oversea, not the true balances.”
According to the documents, the OSC investigation began in February, but the commission began receiving word of complaints from clients this month that they were unable to get their money out of the fund.
A hearing at the Ontario Securities Commission is set for April 1 in Toronto.
In a separate matter, the OSC will hold a hearing June 5 to consider imposing sanctions on Andrew Keith Lech, who was sentenced to six years in prison after pleading guilty in 2007 to operating “a Ponzi scheme of enormous proportions.”
“In short, Lech admitted to having accepted millions of dollars from investors on the basis of a promise he would invest it on their behalf, guarantee the return of the capital and provide extremely high rates of return,” the OSC said in an amended statement of allegations made public Thursday.
The regulator is seeking a stock trading ban and other possible sanctions including prohibiting Lech from acting as an officer or director of a public company or fund manager.
A forensic audit showed that more than 95% of the nearly $46-million in Canadian and U.S. funds Lech accepted from investors between 2001 and 2003 was never invested.
http://www.canada.com/business/fp/story.html?id=1432077
Canadian Fund Manager Ran $60 Million Ponzi Scheme, OSC Says
By Joe Schneider
March 26 (Bloomberg) — A Toronto fund manager oversaw a Ponzi scheme that defrauded investors in Canada, the U.S. and China of about $60 million, the Ontario Securities Commission alleged.
Weizhen Tang, who ran Weizhen Tang Corp. and Oversea Chinese Fund Ltd. Partnership, told investors recently the company had no assets to pay requested redemptions, the OSC, Canada’s main stock-market regulator, said in papers filed in Ontario Superior Court on March 23. A judge yesterday extended a freeze on Oversea’s assets until April 30.
“Tang had been using new funds raised from investors to pay redemptions requested by previous investors,” the OSC said in the filing. That is the classic definition of a Ponzi scheme, named after Charles Ponzi, who was charged with fraud in 1920.
It’s the first allegation of a Ponzi scheme in Canada since a slump in North American stock markets began in June. In the same period, the U.S. Securities and Exchange Commission has filed more than a dozen lawsuits to freeze money raised in alleged Ponzi schemes, including a $65 billion scam run by New York financier Bernard Madoff.
On his Web site, Tang said he began Weizhen Tang Corp. in 2007 in Toronto and was registered “within the framework of the Ontario Securities Act.” Most of his clients are “senior and affluent overseas Chinese” in Canada, the U.S., China, Hong Kong, Taiwan and Malaysia, he said.
The fund invests in stocks, foreign exchanges, futures, options and mutual funds on Wall Street and stock markets in China and Hong Kong, Tang said. The minimum investment is $150,000, U.S. or Canadian.
$15 Million Loss
The OSC said it has evidence that in 2007, Oversea lost about $15 million. Tang told investors the fund made “significant profits,” the OSC said.
Hugh Lissaman, who is listed as Tang’s lawyer in the court documents, didn’t immediately respond to a request for comment.
A phone number listed on Tang’s Web site was answered by a man who identified himself only as Dr. Gou and said he was Tang’s friend and consultant. Gou said Tang wasn’t available to comment and it was too early to discuss the OSC allegations.
The case is Between Ontario Securities Commission and Oversea Chinese Fund Ltd. Partnership. Ontario Superior Court of Justice (Toronto). CV-09-8090.
To contact the reporter on this story: Joe Schneider in Toronto at [email protected].
Last Updated: March 26, 2009 18:34 EDT
http://www.bloomberg.com/apps/news?pid=20601082&sid=aPWE2bmvzufI&refer=canada
OSC investigates alleged $60M Ponzi scheme
BNN staff
March 26, 2009
Alan Mak, principal of Rosen & Associates, talks securities fraud.
BNN has learned of an Ontario Securities Commission investigation into a potential fraud case that could be among the largest ever in Canada.
Weizhen Tang and his Oversea Chinese Fund Limited Partnership have been given a cease-trade order while the regulator investigates whether the $60-million fund misled investors.
The OSC document alleges that the fund “had been using new funds raised from investors to pay redemptions requested by previous investors.”
Amanda Lang has more.
http://www.bnn.ca/news/8138.html
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Fund manager accused of $60 million fraud
Investors in Canada, U.S. and China targeted
Mar 27, 2009 04:30 AM
Madhavi Acharya-Tom Yew
and Nicholas Keung
Staff Reporters
The Ontario Securities Commission is investigating an alleged Ponzi scheme run by a Toronto businessman that may have raised as much as $60 million, some from the Chinese Canadian community, according to court documents filed this week.
The allegations come a week after the OSC issued a cease trade order on March 17 against Weizhen Tang, who ran Weizhen Tang Corp., Weizhen Tang and Associates and Oversea Chinese Fund Ltd. Partnership. “Evidence obtained by staff demonstrates that recently Tang had been using new funds raised from investors to pay redemptions requested by previous investors,” according to documents filed in Ontario Superior Court of Justice on March 24.
Described on his company’s website as “the Chinese Warren Buffett,” Tang could not be reached for comment yesterday.
Interviewed by the Toronto Chinese-language newspaper Sing Tao Daily last week before the OSC issued the temporary order to cease all trading of his company, Tang said he had been aware of complaints against his company.
But Tang said his business has shifted from securities to foreign exchange and the order would have little impact on his operations.
Tang and his companies have raised funds in Canada, the United States and mainland China, the OSC said in its cease trade order.
From 2006 to 2008, Weizhen Tang and Associates “distributed units of Oversea to members of the public raising approximately $60 million (U.S.),” the court filing reads.
OSC staff has recently received complaints from members of the public “who had placed funds with Oversea China and have been unable to redeem their investments,” according to the court documents.
http://www.thestar.com/Business/article/609083