Danny Pang accused of defrauding investors with Life Settlements

The Securities and Exchange Commission accused Irvine financier Danny Pang on Monday of defrauding investors of hundreds of millions of dollars and obtained a court order freezing his assets and directing Pang to surrender his passports.

In a complaint filed in federal court in Los Angeles, the SEC accused Pang of defrauding investors by misrepresenting his background and the safety of his company’s investment products. The lawsuit also alleged that Pang used newer investors’ money to make interest payments to earlier investors.

U.S. District Judge Philip S. Gutierrez froze Pang’s assets and those of his company, Private Equity Management Group Inc. (PEMGROUP), and requested that he return any “ill-gotten gains” and any money that might have been sent overseas. Many of Pang’s clients lived in Taiwan, the SEC alleged. Gutierrez scheduled a May 11 hearing to consider whether to extend the emergency order.

This month Pang temporarily relinquished control of his company, which he said would conduct an internal review of management policies. The firm’s chief financial officer, Wilbur Quon, also stepped down temporarily.

In its complaint, the SEC alleged that Pang misstated to investors that he had earned a bachelor’s degree and an MBA from UC Irvine when he had no such degrees. He also told investors that he had previously worked as a senior vice president and high-tech merger advisor with Morgan Stanley when he had no such experience, the suit alleged.

Pang’s company has been offering securities since 2003, saying that it would invest in life insurance policies of seniors and in time-share real estate. It promised returns of 5.25% to 7% and said all investments were fully guaranteed by insurance policies, according to the SEC’s complaint.

More details will be shared once we get them.