Oklahoma City, OK – November 25, 2009 – A federal court in Oklahoma City has issued a restraining order against Kenneth W. Lee, Simon Yang, Prestige Ventures Corp., and Federated Management Group Inc., freezing their assets and appointing a temporary receiver. The action, stemming from a joint enforcement effort by the U.S. Commodity Futures Trading Commission (CFTC) and the Oklahoma Department of Securities, alleges a fraudulent commodity futures pool operation.
The complaint details that since at least July 2003, the defendants operated a pool with at least $8.7 million in assets and 140 participants. The CFTC alleges that Lee, Prestige, and FMG fraudulently solicited investors, specifically targeting members of Oklahoma City’s ethnic Chinese community, with Yang reportedly soliciting members of his church.
According to the CFTC, the defendants falsely claimed consistent monthly profits generated by Lee’s trading of commodity futures, foreign currency, and other instruments. However, Lee reportedly sustained net losses of approximately $4.3 million. The defendants are also accused of misusing pool participant funds for personal expenses, including cars, yacht fees, and transfers to family members, as well as using new investor funds to pay off existing investors.
Simon Yang faces additional charges for submitting a false declaration to the CFTC in response to a subpoena. He allegedly misrepresented the scope of his solicitation efforts, claiming he only used email and that those he contacted did not open accounts. The CFTC contends Yang actively solicited through his church and personal contacts, failing to disclose his work on behalf of Prestige and Lee.
The complaint further alleges the defendants failed to disclose Lee’s prior felony convictions, prison sentence, and a $3 million civil judgment against him, as well as ongoing federal investigations. They allegedly misrepresented Lee’s trading success, the registration status of FMG’s marketers, the assets under management by Prestige and FMG, insurance coverage for participant accounts, and Yang’s relationship with Lee.
A hearing to determine whether a preliminary injunction should be entered is scheduled for December 2, 2009. The CFTC is seeking restitution, disgorgement, civil monetary penalties, and permanent injunctions against the defendants to prevent further violations of federal commodities laws.
The Oklahoma Department of Securities assisted the CFTC in this investigation.
Source: CFTC.gov
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