Yet Another Succesful Fraud Investigation, Courtesy of Barry Minkow
From the Associated Press:
The Securities and Exchange Commission charged a Southern California man with fraud for allegedly running a $45 million Ponzi scheme through investment firms that claimed to make loans to Asian companies.
A complaint was filed Thursday against Terchi “Nelson” Liao, 49, the SEC said. A judge also temporarily halted the activities of two firms he controls, AOB Commerce and AOB Asia Fund, and froze their assets, the agency said.
According to regulators, Liao took in at least $45 million since 2004 from hundreds of investors nationwide, promising them monthly returns as high as 5.5 percent.
While Liao and his firms claimed they made loans to companies in China and other Asian countries, most of the money they received went instead to paying interest due to other investors, officials said.
In a Ponzi scheme, early investors are generously rewarded when they recruit investors. It is illegal to use money from those recruits, rather than real investments, to pay promised returns.
A lawyer representing Liao, Russ Frandsen, said AOB Commerce was cooperating with authorities.
“AOB Commerce had consulted several attorneys during the course of its business in an effort to comply with the law and AOB commerce believed it was in full compliance with the law,” he added.
A hearing in the case was set for Aug. 6.
Allegations were brought to the attention of authorities by Barry Minkow, a former federal convict turned anti-fraud investigator. Minkow is co-founder of the for-profit Fraud Discovery Institute in San Diego.
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Tags: aob commerce, ponzi scheme
