SEC Charges Luca International With Alleged $68M Ponzi Scheme

Today, the SEC announced that they have brought charges against Luca International, an oil and gas company that operates in the Bay Area, California. Government regulators allege that the company was operating as a Ponzi-like scheme and affinity fraud that ultimately stole and estimated $68 million from investors.  In addition to Luca International’s charges, the US government has filed charges against Luca CEO Binging Yang, for allegedly orchestrating the fraud and openly misleading investors on the state of the company.

Luca International

CEO Yang allegedly overstated Luca International’s oil reserves and investment returns

Detailed in the press release, the SEC details how Luca International was allegedly preying on Chinese-Americans and Chinese immigrants using the EB-5 Immigrant Investor Program. The charges detail how Yang would over exaggerate Luca’s holdings and oil reserves by a substantial margin (despite the company’s mountain of debt and lack of earnings) and later diverted $2.4 million of investor funds to her personal accounts.  While the money was supposed to buy a new oil rig, it actually bought CEO Yang a nice, gated, 5,600 sq. foot home in Fremont, CA.  Additionally, the complaint details of investor money being used to pay for Yang’s personal taxes, pool maintenance, gardening, and even a family vacation to Hawaii.  Luca International allegedly targeted the Chinese-American community in California through extensive advertising campaigns through TV ads, newspapers, radio, etc.

SEC brings charges against Luca’s employees for their role in the fraud

While Binging Yang is the SEC’s main target in this case, the government regulator also brought charges against former VP of business development Lei Lei, “who allegedly sold securities to investors and helped Yang divert investor funds,” (SEC). Former CFO Anthony Pollace was able to reach a $25,500 settlement with the government on charges of his role within the fraud.  Yong Chen was allegedly able to raise investor equity through a separate company called Entholpy EMC, and thus has also been implicated in this case as an important part of the fraud.  Lastly, Hiroshi Fujigami and Wisteria Global, his company, were able to reach and agree to a settlement with the US government, in which the company would return the $1.1 million in profits it gained from the fraud and Fujigami agreed to terms of being barred from the financial services industry.

Once estimated to be a billion dollar company by 2018, the company’s future looks extremely bleak after evidence of fraud has been uncovered by the SEC.  “LUCA will be a world-class oil and gas company driven by shared commitment to excellence,” states the CEO’s Message on the Luca International website.

Disclosure: None