SEC v. Yin Nan “Michael” Wang, Wendy Ko, et al., Case No. CV 13-07553 JAK CSSx (C.D. Cal.) On November 1, 2013, the SEC announced it obtained an emergency asset freeze against Yin Nan (Michael) Wang, Wendy Ko and some companies allegedly involved in a real estate investment scheme. According to the SEC, Wang is the owner of Defendant Velocity Investment Group. Wang and Ko also allegedly controlled Bio Profits Series fund accounts which transferred investor funds to make quarterly interest payments to other investors. According to the SEC, Wang admitted that Velocity was using new investor money to pay earlier investors. The SEC also alleges that Wang had one of the Bio Profit Series funds give its outside accountant inaccurate financial information that overstated its mortgage loans receivable and mortgage income figures. According to the SEC, Wang and Ko used transactions between the Bio Profit Series funds and another company charged in the complaint – Rockwell Realty Management – in the hopes of hiding the fraud. The transactions did not have a legitimate business purpose other than to hide the amount of transfers among the various funds.
The SEC charged Wang and his companies as well as Ko with violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5. The SEC obtained a temporary asset freeze against Velocity, Bio Profit Series I, Bio Profit Series II, Bio Profit Series III, Bio Profit Series V, and Rockwell Realty Management. A court hearing has been scheduled for December 9 on the SEC’s motion for a preliminary injunction. In addition to the emergency relief, the SEC seeks permanent injunctive relief, civil monetary penalties and disgorgement.