SEC Obtains Asset Freeze In Ponzi Scheme Targeting Chinese-American Community in Dallas Area
FOR IMMEDIATE RELEASE
2009-74
Washington, D.C., April 6, 2009 — The Securities and Exchange Commission has obtained an asset freeze to halt a multi-million dollar Ponzi scheme and affinity fraud targeting members of the Chinese-American community, primarily in the Dallas area.
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Additional Materials
Litigation Release No. 20988
SEC Complaint
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The SEC has charged Weizhen Tang, who describes himself as the “Chinese Warren Buffett” according to the SEC’s complaint, as well as a Canadian-based hedge fund that he controls. The SEC alleges that Tang raised between $50 million and $75 million for the Oversea Chinese Fund Limited Partnership from more than 200 investors, and has operated a Ponzi scheme with the hedge fund since at least 2006.
“This case represents another unfortunate example of a money manager who violated investors’ trust,” said Rose Romero, Director of the SEC’s Fort Worth Regional Office. “The SEC will act aggressively to freeze the assets of such wrongdoers to the extent possible for investors.”
The SEC’s complaint, filed in federal court in Dallas, also charged Plano, Texas-based investment adviser WinWin Capital Management LLC as a defendant, and named two other Tang entities as relief defendants: WinWin Capital Partners LP, and Bluejay Investment LLC (d/b/a Vintage International Investment LLC). In granting the SEC’s request for emergency relief for investors, U.S. District Judge Jane Boyle on April 3 entered a temporary restraining order, froze the defendants’ assets, and appointed a receiver to marshal assets.
The SEC’s complaint alleges that Tang told investors in February 2009 that in an effort to conceal substantial trading losses and attract new investors to the Oversea Chinese Fund, he posted false profits on investors’ account statements and used funds from new investors to return principal and pay out at least $8 million in “fake” profits to other investors.
According to the SEC’s complaint, Tang raised capital for the hedge fund from U.S. investors by offering and selling limited partnership interests in WinWin Capital Partners since November 2007. WinWin Partners had raised, as of March 10, 2009, almost $17.3 million in principal investments from approximately 75 U.S. investors, most of which are located in the Dallas area but also in California. At least $9.6 million of the money raised from U.S. investors remains unaccounted for.
The SEC’s complaint charges, among other things, that the defendants violated the anti-fraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. In addition to emergency and interim relief that has been obtained, the SEC seeks a final judgment permanently enjoining the defendants from future violations of the relevant provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains with prejudgment interest.
The SEC’s investigation is continuing.
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For more information, contact:
Rose Romero
Regional Director, Enforcement
SEC’s Fort Worth Regional Office
(817) 900-2623
Steve Korotash
Associate Director, Enforcement
SEC’s Fort Worth Regional Office
(817) 404-7975
(817) 978-6490
http://www.sec.gov/news/press/2009/2009-74.htm
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SEC charges “Chinese Warren Buffett” of Ponzi scheme
Mon Apr 6, 2:49 PM
WASHINGTON (Reuters) – U.S. securities regulators charged a Toronto-based fund manager, who describes himself as the “Chinese Warren Buffett” and his hedge fund with operating a multimillion dollar investment fraud, the Securities and Exchange Commission said on Monday.
The SEC, which obtained an asset freeze to halt the alleged fraud, charged Weizhen Tang and his Canadian-based hedge fund with operating a Ponzi scheme, where funds from new investors were used to pay purported profits to other investors.
Since as early as 2004, Tang has raised as much as $75 million from more than 200 investors for his hedge fund called the Oversea Chinese Fund Limited Partnership, the SEC said.
Tang told investors in February 2009 that, in an effort to conceal substantial trading losses and attract new investors to his hedge fund, he posted false profits on investors’ account statements and used funds from new investors to pay out at least $8 million in “fake” profits to others, the SEC said.
Attempts to reach Tang at Weizhen Tang Corp were unsuccessful. In a public letter to partners posted on Weizhen Tang’s website, Tang said: “I did not steal everyone’s funds.”
“For my investment partners, February 27 of 2009 was a most shocking, heart-breaking and grieving day,” Tang wrote in the letter. “It was also a day of tremendous pain to myself, one that I had feared so much but eventually it arrived. Because of the sin that I had committed, I have hurt you badly. I’d like to extend my deepest apologies.”
According to the SEC’s complaint, Tang targeted members of the Chinese American community and solicited U.S. investors to directly and indirectly invest in the hedge fund.
Since at least November 2007, the SEC alleges, Tang raised capital for his hedge fund from U.S. investors by offering and selling limited partnership interests in WinWin Capital Limited Partnership, a Texas based venture that he controls. WinWin Partners’ sole business is investing partnership capital in the Oversea Chinese Fund, the complaint said.
The SEC alleges Tang sent e-mails to investors to persuade them to trust him with even more of their money and allow him to continue trading on their behalf. Within the last two weeks, Tang has informed investors he is actively raising an additional $1 million to “recoup” investor losses and creating new business entities, bank accounts and brokerage accounts to circumvent action by the SEC and Canadian regulator the Ontario Securities Commission.
Edwin Tomko, a lawyer representing WinWin-related entities said his clients are cooperating with the SEC and the court-appointed receiver.