Bio Profit, Velocity Group, Promoters Charged with $131 Million Ponzi Scheme
Velocity Investments, several Bio Profit investment funds and their organizers and promoters Michael Wang, also known as Yin Nan, and Wendy Ko, have been charged with running a Ponzi scheme which had a total take estimated at $131 million.
Yin Nan, a.k.a. Michael Wang and Wendy Ko have raised funds from approximately 2,000 investors by selling promissory notes issued via the Velocity Investment Group, the SEC has charged.
Velocity Investment Group managed a series of investment funds called the Bio Profit Series, according to the Commission’s complaint. Each of the Bio Profit Series funds purports to be primarily in the business of making real estate-related loans in California, but in reality Wang and Ko have used money received from newer investors to make the promised quarterly interest payments to earlier investors in Ponzi-like fashion, according to the SEC.
Wang has been raising money since at least 2005 using his Velocity Investment Group and the Bio Profits Series fund accounts. According to the SEC complaint, Ko was using some investor funds to make quarterly payments to other investors.
Wang ran Velocity like a Ponzi scheme, allegedly collecting investor funds and using the same to make payments to other investors. For instance, the SEC alleged that in 2012 Michael Wang used BPS I funds, to the tune of $4.8, to fund interest payments to other BPS I investors.
Wang directed one of the BPS funds to provide its outside accountant with incorrect financial information that materially overstated its mortgage loans receivable and mortgage income figures. Wang suppressed material information and falsified information on its website fearing investor flight, said the Commission.
The Bio Profit funds were subjected to a variety of fees that significantly reduced the amount of investor principal that could be invested as little as 82 to 86 percent of the investment actually became part of the funds. Hence the BPS funds could afford to pay above market average to meet investor obligations using the money taken as fees, according to the SEC’s investigation.
Wang and Co used BPS funds together with Rockwell Realty Management to conceal the fraud they were perpetrating, according to the SEC. A number of anomalous transactions between the two entities appear to have had no other purpose other than obfuscate the amount of transfers among various funds. Such transfers occurred from June 2007 to April 2013, the Commission charged.
Rockwell, BPS and Velocity Investment Group were used by the defendants to transfer money in apparently legitimate transactions in order to hide the fraud, according to the Complaint.
The Peiffer Wolf securities attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud or misconduct. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.
Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Wolf, Jason Kane or Joe Peiffer, for a free, no obligation evaluation of their recovery options, at 585-310-5140.