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$75 Million Ponzi Scheme Collapsed, SEC Says

DALLAS (CN) - Weizhen Tang took as much as $75 million from 200 Chinese-Americans in a Toronto-based Ponzi scheme he called the Overseas Chinese Fund, the SEC says in Federal Court. Tang, who called himself "the Chinese Warren Buffet," admitted in February that his hedge fund reported false profits, to conceal trading losses and attract more victims, the SEC says.

The agnecu said Tang admitted he used new money to pay out old "profits" - the essence of a Ponzi scheme.

The SEC said Tang targeted Chinese-Americans by selling limited partnership interests in WinWin Limited Capital Partnership, a Texas-based entity Tang controls. WinWin's sole business is investing partnership capital in the hedge fund.

"As of March 10, 2009, WinWin Partners has raised almost $17.3 million in principal investments from approximately 75 investors, most of which are located in the Dallas area," according to the complaint. "These investors have withdrawn approximately $8.4 million from the hedge fund, of which at least $700,000 was paid out as purported profits. Nearly $9.6 million in investor principal remains unaccounted for. Consistent with his recent confession to investors, funds invested with WinWin Partners were used to pay other investors in a Ponzi fashion."

After confessing to investors, the SEC says, Tang sent emails asking them to trust him with even more of their money.

"Within the last two weeks, Tang has informed investors that he is actively raising an additional $1 million to 'recoup' investor losses and creating new business entities, bank accounts and brokerage accounts to circumvent action by the Commission and/or the Ontario Securities Commission," the complaint states.

The SEC seeks disgorgement, fines and an injunction.

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