Stock Market Investing - Weizhen Tang's Alleged Ponzi Fraud
Stock Market News
Another Ponzi scheme has allegedly been uncovered by the SEC, which has charged Mr Weizhen Tang, a Toronto-based fund manager and his hedge fund with operating an investment fraud.The SEC has charged Weizhen Tang with operating a Ponzi scheme - for a definition of a Ponzi scheme see What is a Ponzi scheme.
Starting in 2004, Mr Tang raised $75 million from over 200 investors for the Overseas Chinese Fund Limited Partnership hedge fund.
According to the SEC, Mr Tang told investors that he posted false profits and used funds from new investors to pay out at least $8 million in "fake" profits to old investors in order to hide substantial trading losses.
In a letter to partners on Weizhen Tang's website - wtang.com -, he said: "I did not steal everyone's funds."
"For my investment partners, February 27 of 2009 was a most shocking, heart-breaking and grieving day. It was also a day of tremendous pain to myself, one that I had feared so much but eventually it arrived. Because of the sin that I had committed, I have hurt you badly. I'd like to extend my deepest apologies."
On 31 March Mr Tang posted the fifth open letter in which he said "For both Ponzi and Madoff, their purpose is to take possession of the funds of the clients by deception. However, I am by no means like them, so I am not afraid of the judicial process. Though some of my actions were not appropriate in the process of financing, they were conducted only for the purpose of investment and for verifying my investment philosophy so that I can lead my clients on to the path of prosperity. The ongoing investigation will prove this fact."
In his hedge fund Mr Tang targeted members of the Chinese American community.
From November 2007 and possibly earlier, acording to the SEC, Tang raised capital for his hedge fund by selling limited partnership interests in Texas based venture WinWin Capital Limited Partnership.
The SEC alleges that Weizhen Tang e-mailed investors asking them to entrust even more of their money to him so that he could continue trading on their behalf and also informed investors that in the last 2 weeks he has been actively raising an additional $1 million to "recoup" investor losses and has been creating new business entities, bank accounts and brokerage accounts to get round action by the SEC and Canadian regulator the Ontario Securities Commission.
According to Edwin Tomko, an attorney representing WinWin-related entities WinWin is cooperating with the SEC.
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