For Release: November 25, 2009
Oklahoma City Chinese Community Targeted In Multi-Million Dollar Commodity Futures Ponzi Scheme Operated by South Carolina Resident Kenneth Lee and Oklahoma Resident Simon Yang and their Companies
CFTC and Oklahoma Department of Securities charge Prestige Ventures Corp., Federated Management Group Inc. and Lee with fraud and misappropriating funds.
Defendant Yang also charged with fraud and providing false information to the CFTC.
Washington, DC –The U.S. Commodity Futures Trading Commission (CFTC) today announced that a federal court in Oklahoma City entered a restraining order against defendants Kenneth W. Lee, Simon Yang, Prestige Ventures Corp. (Prestige) and Federated Management Group Inc. (FMG). The court’s order, entered on November 20, 2009, freezes assets controlled by the defendants, protects records and appoints a temporary receiver to locate and marshal assets for return to defrauded customers.
The order stems from a joint enforcement action filed the same day by the CFTC and the Oklahoma Department of Securities, charging that, since at least July, 2003, the defendants fraudulently operated a commodity futures pool that had at least $8.7 million in assets and 140 participants. The CFTC complaint alleges that in their solicitations the defendants targeted members of Oklahoma City’s ethnic Chinese community. Yang allegedly solicited members of his church.
The CFTC complaint charges defendants with fraudulently soliciting and issuing false statements to pool participants. These statements consistently showed monthly profits generated by Lee’s purportedly successful trading of commodity futures, foreign currency (forex) and other instruments. However, Lee sustained net losses of approximately $4.3 million trading primarily commodity futures and forex. Lee, Prestige and FMG also allegedly misused pool participant funds to pay off other pool participants and for personal use, such as paying for cars and yacht fees and funneling money to family members.
Yang is further charged with submitting a false declaration to the CFTC in response to a CFTC subpoena requiring the production of documents and information relating to Yang, Lee, FMG and others. In his declaration, Yang falsely claimed that he solicited only through email based on information on the FMG website, that the persons he solicited did not open accounts and that he no longer solicited for FMG. Yang failed to disclose that he was soliciting on behalf of Prestige and Lee. Yang actively solicited FMG and Prestige pool participants through his church and other personal solicitations, according to the complaint.
In soliciting prospective pool participants, defendants allegedly failed to disclose, among other things, that Lee committed two felonies, served prison time and had a related $3 million civil judgment against him, and that defendants were under investigation by federal authorities.
Defendants allegedly falsely represented that: (1) Lee’s trading was highly profitable, and he never suffered losses; (2) FMG’s marketers or solicitors were members of the National Futures Association and registered with the CFTC; (3) in December 2003, Prestige had $1 billion in assets under management and FMG had up to $379 million; (4) pool participant accounts were insured by FMG’s credit union and; (5) Yang was merely a friend of Lee and an investor.
The court has set a hearing on the court’s order to show cause why a preliminary injunction hearing should not be entered for December 2, 2009, at 10:00 a.m.
In its continuing litigation, the CFTC seeks restitution, disgorgement, civil monetary penalties and permanent injunctions against further violations of the federal commodities laws and against further trading.
The CFTC’s Division of Enforcement would like to thank the Oklahoma Department of Securities for their assistance.
The following Division of Enforcement staff members are responsible for this case: Katherine Scovin Driscoll, Kara Mucha, Michelle Bougas, James H. Holl, III., Gretchen L. Lowe and Phyllis J. Cela.
Last Updated: November 25, 2009