"Chinese Warren Buffet" is Charged

ddd

SEC files suit against "Chinese Warren Buffet"


2009-04-06 18:32 ET - Street Wire

Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission

by Mike Caswell

The U.S. Securities and Exchange Commission has filed civil charges against Wiezhen Tang, the self-proclaimed "Chinese Warren Buffet" who allegedly ran a Ponzi scheme from Toronto. The SEC says Mr. Tang raised between $50-million and $75-million from more than 200 members of the Chinese-American community through a hedge fund called Oversea Chinese Fund LP. (All figures are in U.S. dollars.) The SEC case comes one week after the Ontario Securities Commission suspended Oversea and began investigating Mr. Tang.

In conjunction with filing the case, the SEC sought and obtained an emergency order temporarily freezing the fund's assets and appointing a receiver.

SEC's complaint

The SEC filed a complaint against Mr. Tang, 50, in the Northern District of Texas on April 3, 2009. The regulator identifies him as a Chinese Canadian living in the Toronto area. According to the complaint, Mr. Tang created his hedge fund in December, 2001, and claimed he could generate an average annual return of over 40 per cent. The fund allegedly purported to invest 99 per cent of its money in conservative investments, and 1 per cent in speculative short-term investments. The SEC says the fund did not charge investors a fee on the first 6 per cent of profit, but it did charge a 25-per-cent "management" fee on any additional profits.

The SEC says Mr. Tang began soliciting U.S. investors in May, 2007. He targeted Chinese-Americans mostly living in Dallas, Tex., and some in California, the complaint alleges. As of March 10, 2009, he had raised $17.3-million from those investors, according to the SEC. They have since withdrawn $8.4-million, but $9.6-million remains unaccounted for, the regulator claims.

The scheme began to fall apart in January, 2009, according to the complaint. Between Jan. 26 and Jan. 30, Mr. Tang conducted a public, real-time trading demonstration at his office in Toronto. Investors and the media were invited, and those unable to attend were able to watch on-line. "After watching Tang's public demonstration many investors became very concerned about their investments, because Tang was unable to duplicate the percentage returns that the Hedge Fund had purported to achieve -- as reflected on the investors' account statements on the Hedge Fund website," the complaint states.

On Feb. 7, 2009, Mr. Tang sent an e-mail to his investors, acknowledging that the demonstration had failed, the SEC says. In it, he claimed not to have lost any money, but conceded that the results were far from his stated goal of 1 per cent per week. The complaint alleges that many investors lost confidence in Mr. Tang after the demonstration failed, and they attempted to withdraw large amounts of money from the fund. Mr. Tang allegedly told them that the fund did not have sufficient assets to pay the withdrawal requests.

The SEC claims that Mr. Tang then met with approximately 200 investors in Toronto who confronted him about his failure to honour withdrawal requests. "In response, Tang admitted that (i) the Hedge Fund had no more money, (ii) deposits into the Hedge Fund by new investors had been used to pay withdrawals and purported profits to earlier investors, and (iii) the information posted on the Hedge Fund website, showing the daily value of each investor's account, was false," the complaint states. In later phone conferences, Mr. Tang allegedly said that the fund sustained losses of $15-million in 2006 and 2007, and that he posted fake profits on the website to attract more investors and conceal the losses.

According to the complaint, Mr. Tang sent two e-mails to investors on March 8 and March 19, 2009, asking them to give him one year to repay each investor's debt. He allegedly said that "even if I have to go to jail, I still hope that I can go after I have repaid all of you."

Despite the fraud becoming public, Mr. Tang is creating new entities and accounts to avoid government intervention that would prevent his trading, the SEC claims. He has recently lost more than $500,000 in trading in U.S. accounts, the complaint alleges.

The regulator is seeking an order appointing a receiver for the fund's remaining assets, appropriate civil penalties and disgorgement of benefits illegally obtained. In addition to Mr. Tang, the suit names as defendants several entities he allegedly controls: Oversea Chinese Fund LP; Weizhen Tang & Associates Inc.; Weizhen Tang Corp.; WinWin Capital Management LLC; WinWin Capital LP; and JOR & Associates LLC.

Mr. Tang has not responded to the suit, but a statement posted to his website says "judicial proceedings ... should be viewed as the best and most effective but undesired way to clear my name." The site states that there are no criminal charges, and that "truth will prevail eventually." The site further says that the investigation will prove that Mr. Tang's actions "were conducted only for the purpose of investment and for verifying my investment philosophy so that I can lead my clients on to the path of prosperity."

ppteam

hahaha....

vegas

看来嘴硬很重要

H_T

sigh, what a loser

dara

He is such a cheater.

From what I read, he already lost a lot money since early last year, but if you go to his website, he did a real-time demo this Feb. to show how good his trading skill is(though he lost money on the real-time demo and he said it was because of the pressure).