Taiwanese immigrant financier Danny Pang, 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 dozens of small transactions so he wouldn't have to report the sum to federal regulators.
The U.S. attorney's office said the founder and former chief executive of the Private Equity Management Group companies was arrested at his lawyer's office in Santa Ana.
The Securities and Exchange Commission filed a lawsuit Friday against Pang and PEMGroup, accusing him of bilking investors by falsely portraying returns as coming from investments in timeshare real estate and seniors' life insurance policies. Regulators say the money in fact came from a Ponzi scheme in which he used funds raised from newer investors to pay earlier ones.
A federal court froze his assets and those of his two California 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.
Federal prosecutors filed a criminal complaint Tuesday 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.
Pang's attorney, David Schindler, declined to comment on the charges because he had not seen the evidence.
"These allegations have nothing to do with the false allegations concerning PEMgroup," Schindler said. "He looks forward to being fully vindicated."
He said his client voluntarily returned to the United States from China last week to cooperate with investigators.
Calls by The Associated Press seeking comment from the company were not immediately returned.
The SEC also alleged Pang and his firms lured investors by falsifying his credentials and misrepresenting how his money-management firm made money.
After his former partner, Nasar Aboubakare, claimed the business was built around a Ponzi scheme, Pang voluntarily stepped aside as chairman and chief executive officer. The company appointed a special committee to investigate the allegations.
Pang founded a $4 billion international investment firm and has lived lavishly in Newport Beach.
He was to spend the night in jail and face arraignment Wednesday, prosecutors said. He faces a maximum of 10 years in federal prison if convicted of structuring the cash transactions.