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Univ. of Toledo College of Law

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Monday, March 30, 2009

SEC Obtains Judgment in Ponzi Scheme Targeting Cambodian Immigrants

The SEC announced that on March 26, 2009, the United States District Court for the District of Massachusetts entered final judgments against five defendants in a civil action filed in November 2005 involving a fraudulent investment scheme targeting Cambodian immigrants. The Commission's action charged that defendants WMDS, Inc. ("WMDS"), OneUniverseOnLine, Inc. ("1UOL"), James Bunchan, Seng Tan and Christian Rochon falsely promised members of the Cambodian immigrant community guaranteed monthly returns on investments that purportedly would pass on to future generations. The complaint alleged that the defendants emphasized their shared Cambodian heritage with their victims, and that certain written solicitation documents drew a parallel between investing in WMDS and fulfilling the American dream. In fact, according to the complaint, the defendants were operating a fraudulent pyramid scheme that ceased making the promised monthly payments in mid-2005.

The final judgments entered by the Court against Bunchan, Tan, Rochon, WMDS and 1UOL came in response to a Commission motion for default judgments and (1) permanently enjoin the defendants from future violations of Sections 17(a) and 5(a) and 5(c) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder; and (2) require the defendants, jointly and severally, to disgorge $26,261,133.16 in ill-gotten gains, such amount to be reduced by any amount forfeited or paid as part of a related criminal proceeding.

On November 28, 2007, Bunchan and Tan each were sentenced by the United States District Court for the District of Massachusetts in a related criminal action after being convicted of mail fraud, conspiracy and money laundering in connection with the fraudulent investment scheme. Bunchan was sentenced to 35 years in prison and Tan was sentenced to 20 years in prison. On August 7, 2008, Rochon was sentenced by the same court based on his June 4, 2007 guilty plea to mail fraud, conspiracy and money laundering in connection with the fraudulent investment scheme. Rochon was sentenced to 5 years probation, with the first year to be served in home confinement.

http://lawprofessors.typepad.com/securities/2009/03/sec-obtains-judgment-in-ponzi-scheme-targeting-cambodian-immigrants.html

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