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 Danny Pang, the California-based financier accused by federal
regulators of defrauding investors out of hundreds of millions of
dollars, was arrested Tuesday by the FBI on charges he withdrew about
$360,000 from a company account through a bevy of small transactions
so he wouldn't have to make reports to federal regulators.U.S. Attorney Thomas P. O'Brien of the Central District of California said the founder and former chief executive of the Private Equity Management Group companies was expected to make a court appearance on the criminal charges Wednesday afternoon. The Securities and Exchange Commission filed a lawsuit against Pang and PEMGroup Monday, accusing him of defrauding investors by falsely depicting steady annual returns of 5.25% to 7% as coming from investments in senior citizens' life insurance policies and from real estate timeshares. Regulators say Pang was running a Ponzi scheme in which he used funds raised from newer investors to pay earlier ones. The SEC also charged that Pang raised money, mostly from Taiwanese investors, by claiming he was a former senior executive at Morgan Stanley (NYSE:MS) and had an advanced business degree from the University of California at Irvine. Both claims, according to the complaint, were false. A federal court froze his assets and those of his two 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. According to a Department of Justice statement, federal prosecutors filed a criminal complaint Tuesday in U.S. District Court in Santa Ana alleging that starting in June 2007, Pang and his assistants at PEMGroup cashed checks for less than $10,000 to avoid filing currency transaction reports required by the Treasury Department. The affidavit lists 38 checks Pang made out to himself and his assistants, all in amounts between $9,500 and $9,900, that were cashed at an El Monte branch of East West Bank. "In some cases, two checks were cashed on the same day. Pang personally cashed only four of the checks, while most of the checks were cashed by his personal assistant," the statement said. The crime of structuring cash transactions carries a statutory maximum penalty of 10 years in federal prison. The case against Pang is the result of an ongoing investigation by the FBI. - Donna Block See FBI statement See SEC statement See earlier Dealscape post
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