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LOS ANGELES — A California financier accused in a federal fraud lawsuit treated the investments he managed as a "personal piggy bank" to fund a lavish lifestyle and used new investors' money to pay existing investors, a court appointed receiver said.
Robert P. Mosier said in court filings last week that Danny Pang, who had accepted $823 million from Taiwan-based investors, spent $35 million on a fleet of jets, $1 million on a cruise for employees and $1.5 million on a China vacation for his staff.
Pang's clients' investment pool was now worth as little as $213 million, Mosier said.
Pang's alleged practice of paying existing investors with new investors' cash, meanwhile, gave "rise to claims of a Ponzi scheme," said Mosier, who was placed in charge of Pang's assets at the request of the Securities and Exchange Commission.
Pang spokesman Charles Sipkins said in a statement Thursday that Mosier was exceeding his duties as receiver, "choosing apparently to act as prosecutor, judge and jury, all rolled into one."
He insisted that Pang properly managed his clients' investments and said he will ask U.S. District Judge Philip S. Gutierrez to replace Mosier, saying Pang has been denied access to information collected by Mosier and excluded from key interviews.
The SEC has filed a lawsuit against Pang, 42, and his two Irvine-based companies — Private Equity Management Group Inc. and Private Equity Management Group LLC. Investigators say he defrauded investors by falsely portraying returns as coming from investments in timeshare real estate and life insurance policies of seniors.
The judge has set another hearing on the SEC matter for June 15.
Pang also faces criminal charges of withdrawing about $360,000 from a company account through dozens of small transactions so he wouldn't have to report the sum to federal regulators. Pang was arrested last month on those charges and later released on $1 million bail.
Pang has denied wrongdoing through his attorneys.
