Oklahoma City, OK – December 7, 2010 – Kenneth W. Lee of Mt. Pleasant, South Carolina, has been ordered to pay over $13 million in restitution and penalties for operating a multi-million dollar Ponzi scheme targeting approximately 140 investors, primarily of Chinese descent in Oklahoma City. The U.S. Commodity Futures Trading Commission (CFTC) and the Oklahoma Department of Securities jointly filed charges against Lee, Prestige Ventures Corp., Federated Management Group, Inc., and several relief defendants on November 20, 2009.
The U.S. District Court for the Western District of Oklahoma granted summary judgment against the defendants on October 27, 2010, finding that Lee fraudulently solicited at least $10.6 million from investors to trade commodity futures and leveraged forex. The court determined Lee misrepresented returns, assets under management, and failed to disclose his prior criminal history.
Evidence presented showed Lee lost $4.3 million in trading and misappropriated investor funds to pay earlier investors and for personal expenses, including real estate and boats. He also allegedly diverted funds to family members, Sheila Lee, Darren Lee, and David Lee, who were named as relief defendants.
Following a trial to determine sanctions and penalties, the court ordered Prestige, FMG, and Lee to pay $5,857,503 in restitution, plus interest. A civil monetary penalty of $18.2 million was assessed against Prestige and FMG, while Lee was penalized $7.2 million. Simon Yang, another defendant, was ordered to pay $133,500 in restitution and was barred from claiming any funds from the receivership.
The court also ordered Sheila Lee to disgorge $711,845, Darren Lee $638,938, and David Lee $574,273. Kenneth Lee and Darren Lee were further ordered to surrender their residences, purchased with investor funds, to the receiver. All defendants were barred from engaging in commodity-related activities, including trading and registration with the CFTC.
The CFTC’s Division of Enforcement acknowledged the assistance of the Oklahoma Department of Securities in the investigation.
Source: CFTC.gov
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