Orange County investment adviser Danny Pang and his family siphoned $52 million from investors who poured $823 million into a partnership that is now hundreds of millions of dollars in the red, says a court-appointed receiver in a newly disclosed report.
Pang, 42, of Newport Beach, personally took $37.3 million from 2004 to April of this year, according to the report by Mosier & Co. of Irvine, the court-appointed receiver. The report was among numerous documents unsealed Thursday in a case in U.S. District Court in Los Angeles.
Mosier’s report says Pang’s Irvine-based company, the Private Equity Management Group Inc., paid all employees a total $83 million in compensation from 2004 to 2009, almost two-thirds of which directly benefited Pang and his family.
Pang’s attorneys disputed the allegations, writing in court papers that the $83 million is “demonstrably false and was clearly inserted as a further attempt to inflame third parties.”
The report says Pang’s wife, Sheena Pang, received $1.8 million and Pang’s alleged bookie received $1.67 million. Other payments went to Pang’s driver, his brother, his son and an alleged girlfriend. Another $4.2 million could not be accounted for by Mosier.
Pang’s attorneys called those allegations “office gossip, without any support.”
Mosier’s report says Pang paid himself before his investments yielded a profit. Most of the company’s funds, primarily raised from investors in Pang’s native Taiwan, were put into financial instruments based on trading life insurance policies. Pang’s company also has investments in Russia, Costa Rica and private jets.
“As time marched forward, it became clear that this novel approach was only possible by soliciting new investor monies to continue prior investments and pay for the accelerated spending undertaken by Mr. Pang,” Mosier’s report said.
Mosier’s report estimated Pang’s clients have lost up to 80 percent of the $823 million they invested with him.
Pang’s attorneys dispute the receiver’s figures. They cite a PEM Group presentation that shows $568 million of investor money was spent on assets with a $1 billion face value and that $159 million was repaid to investors.
On April 22, the U.S. Securities and Exchange Commission seized Pang’s assets and filed suit, alleging he schemed to defraud investors.
Pang has denied the fraud and argued that the SEC has no right to sue him, because he sold the investments outside the United States. He sought to keep the receiver’s report sealed and has tried to avoid giving a deposition for the SEC case, citing concerns that his statements could be used against him in a separate criminal case.
On April 29, federal prosecutors filed a criminal case alleging Pang sought to conceal large cash transactions from U.S. authorities. Pang has denied the allegations, but has yet to formally enter a plea. His arraignment date is July 26.
A hearing on several matters in the SEC case is scheduled for Monday in U.S. District Court in Los Angeles.
Pang first made headlines in 1997, when his wife, Janie Pang, was shot to death in the couple’s Villa Park home. A trial in the case ended with a hung jury and the crime remains unsolved.
The latest news was first reported by the Wall Street Journal, which filed motions to unseal the court documents.
To see the most recent receiver’s report, CLICK HERE.
To see Pang’s attorneys’ response, CLICK HERE.
