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October 28, 2011

Court liquidates $325,000 in assets in Ponzi scheme

Case involved metro Chinese Ponzi scheme victims

Mark Schlachtenhaufen Special to The Sun

EDMOND — The receiver who liquidated assets in an alleged Ponzi scheme with Edmond ties believes $325,000 can be distributed to investors, court records show.

In November, U.S. District Judge David Russell entered judgment in favor of the Oklahoma Department of Securities and the U.S. Commodity Futures Trading Commission, which had sued Prestige Ventures Corp., Federated Management Group, Kenneth Wayne Lee, of Mount Pleasant, S.C., several of Lee’s relatives and Simon Yang, of Edmond.

The complaint alleged that Lee and Yang fraudulently solicited and accepted at least $8.7 million from at least 140 individuals to participate in commodity pools for trading commodity futures contracts and other means including stocks, stock options and foreign currency.

According to court records, the defendants allegedly targeted members of the Oklahoma City area’s Chinese community, including members of an unnamed Edmond church.

In court records, Lee was accused of misappropriating participant funds for personal use such as giving money to family members, paying for cars and for yacht fees.

In November 2010, U.S. District Judge David Russell entered judgment in favor of the plaintiffs. Stephen Moriarty was appointed temporary receiver for the defendants’ assets.

Moriarty was required to make regular reports to the court outlining the steps taken to identify customers, marshaling assets, determining the amounts owed each customer, assets available to repay customers and an estimated time to distribute and wind up the receivership.

On Monday, Moriarty filed a report regarding investor claims. He reported that he had liquidated all known assets and believes a distribution of $325,000 can be made to the investors. Such a distribution would represent about a 5 percent return to the investors, the report stated.

Moriarty stated he is ready to proceed with a motion for distribution to wind up the receivership.

On Feb. 21, pursuant to the court order, the receiver took possession of two homes. Some of the items were defaced with graffiti, photographs taken by the court show.

Under the judge’s ruling, Yang was ordered to pay restitution totaling $133,000 for distribution to investors, a sum reflecting the amount paid to Yang by defendants during the time period in question, the judge ordered.

Lee was ordered to pay a civil monetary penalty of $7.2 million to the federal agency, reflecting three times his direct, personal monetary gain of about $2.4 million, the judge ordered.

Among other things, Lee and Yang did not disclose that Yang was not just Lee’s friend and purported Prestige investor, but also a marketer and administrator for Prestige Enterprises, the plaintiffs alleged.

Lee, Yang and three other defendants are awaiting decisions on appeals. Moriarty is seeking direction from the court as to whether he should proceed with the motion or wait for a ruling from the Tenth Circuit Court of Appeals.



marks@edmondsun.com | 341-2121 ext. 108

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