International Law

Oversea Chinese Fund Limited Partnership Ponzi

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From the SEC Press Release on the Oversea Chinese Lund Limited Partnership Ponzi.

On April 3, 2009, the Commission filed an emergency action in the United States District Court for the Northern District of Texas to halt an on-going multi-million dollar Ponzi scheme and affinity fraud involving investments in Oversea Chinese Fund Limited Partnership, a hedge fund based in Toronto, Ontario, Canada.

The Commission's complaint alleges that Defendant Weizhen Tang, 50, of Toronto orchestrated the fraud scheme through entities he controls, including Defendants Oversea Chinese Fund Limited Partnership ("Hedge Fund") and WinWin Capital Management, LLC, a Plano, Texas-based investment adviser ("Investment Adviser").

U.S. District Judge Jane Boyle granted a temporary restraining order, asset freeze, and other emergency relief against the Defendants, including the appointment of a receiver to take control of assets belonging to the Investment Adviser and two Relief Defendants -- WinWin Capital Partners, LP, and Bluejay Investment, LLC, d/b/a Vintage International Investment, LLC.

The complaint alleges that from at least as early as 2004 to the present, Tang, acting through the Hedge Fund and other entities he controls, raised between $50 million and $75 million from more than 200 investors.

According to the Commission's complaint, Weizhen Tang (the self-described "Chinese Warren Buffet") recently admitted to investors that the Hedge Fund operated as a Ponzi scheme since at least 2006.

Specifically, the Commission alleges that Tang told investors in February 2009 that he and the Hedge Fund posted false profits on investors' account statements for the purpose of concealing substantial trading losses, and to attract new investors to the Hedge Fund.

Further, the Commission alleges that Tang admitted he used funds from new investors to return principal and pay out "fake" profits to other investors, which totaled at least $8 million in 2006, 2007, and 2008 -- despite significant trading losses incurred during that time.

According to the Commission's complaint, Tang specifically targeted members of the Chinese-American community and solicited U.S. investors to directly and indirectly invest in the Hedge Fund.

The Commission alleges that since at least November 2007, Tang raised capital for the Hedge Fund from U.S. investors by offering and selling limited partnership interests in WinWin Capital Limited Partnership.

The Commission alleges that WinWin Partners' sole business is investing partnership capital in the Hedge Fund.

As detailed in the complaint, WinWin Partners had raised, as of March 10, 2009, almost $17.3 million in principal investments from approximately 75 investors, most of which are located in the Dallas area, but also include investors in California.

According to the complaint, the U.S. investors have withdrawn approximately $8.4 million from the Hedge Fund, of which at least $700,000 was paid out as purported profits; leaving nearly $9.6 million in investor principal unaccounted for.

The Commission further alleges that, consistent with Tang's recent confession to investors, funds invested with WinWin Partners were used to pay other investors in a Ponzi fashion.

Finally, the Commission's complaint alleges that the Defendants funneled some investor funds to associated persons and entities: WinWin Capital Partners LP and Bluejay Investment LLC d/b/a Vintage International Investment LLC. The Commission's complaint names them as relief defendants, and requests orders requiring them to disgorge any funds or benefits they received that are traceable to the Hedge Fund or any affiliated entities or individuals.

Full post as published by Misleading Advertising Law on April 06, 2009 (boomark / email).