LOS ANGELES– The operator of a Brea-based investment company that prosecutors allege was a Ponzi scheme that brought in about $7 million with promises of breakthrough products made with graphene was arrested this morning on federal fraud charges.
Wenxing Huang, who is also known as “Di Peng” and “Fatty,” 33, of San Gabriel, was taken into custody by special agents with the Federal Bureau of Investigation.
A criminal complaint unsealed after this morning's arrest charges Huang with wire fraud and money laundering, charges that together carry a statutory maximum penalty of 30 years in federal prison.
Huang operated Ju Ding, Inc., which solicited funds from investors with false promises that their money would be used to invest in and develop technology based on graphene, which is a layer of pure carbon that is only one atom thick. But, according to the complaint, Ju Ding does not appear to have engaged in any business or to have sold any goods.
An FBI agent who reviewed Ju Ding financial accounts determined that approximately 400 victims invested more than $6.9 million in traceable funds (which does not include cash deposits that may have been made with the company). Huang used approximately half of the funds deposited with Ju Ding to purchase a $1.3 million home in Diamond Bar, luxury automobiles and jewelry.
Promotional materials for Ju Ding promised “Quick profit, wealth creation by helping you make shortcut to your riches,” according to the affidavit. Huang allegedly orchestrated a Ju Ding holiday party at the end of 2013 at the Long Beach Convention and Entertainment Center in which luxury items, including a Mercedes-Benz automobile were raffled off. Records from the facility show that the event for 2,000 people cost more than $180,000.
“Mr. Huang misled hundreds of investors with get-rich-quick promises decorated with fancy cars and parties,” said United States Attorney Eileen M. Decker. “Extravagant promises of instant wealth are almost assuredly frauds, and potential investors should be especially wary of lavish pitches such as those employed by Mr. Huang.”
As part of the scheme, Huang allegedly offered compensation to investors who recruited others, according to the complaint, which alleges that many investors received little, if any, return on their investments. However, approximately $2.2 million appears to have been returned to clients in what were essentially Ponzi payments.
Huang is charged with money laundering for allegedly using approximately $1.2 million in investor funds to purchase the Diamond Bar home, which has since been sold.
Huang is expected to make his initial appearance this afternoon in United States District Court in Los Angeles.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.
USAO – California, Central Topic: Financial Fraud Updated May 5, 2016
Central District of California DOJ / 16-098 / May 05, 2016