"Chinese Warren Buffett" Sued by SEC for Ponzi Scheme

Hedge Fund Manager, Weizhen Tang, 50, of WinWin Capital Management, has been sued by the SEC for running what authorities are calling a Ponzi Scheme. According to authorities, Tang managed about $75 million in assets (barely 1/10 of 1% of Maddoff's fund) and didn't reveal losses of over $15 million in 2007 to investors.

A federal court judge in Dallas agreed to freeze assets and appoint a receiver to recover clients’ money, the SEC said. The agency wants him to forfeit profits and pay unspecified fines.

More interestingly, Tang supposedly referred to himself as the "Chinese Warren Buffett", a claim he denies using until others started calling him by that name.

For years, Weizhen Tang was considered an investment guru in much of the Chinese community in North America. He could supposedly generate a 1-per-cent weekly return.

But Mr. Tang's reputation was dealt a stunning setback during the week of Jan. 26, 2009. That was when he held a public demonstration of his investment strategy in his Toronto office and couldn't match the reported results of his funds.

"Unfortunately the public demo failed," Mr. Tang wrote in an e-mail to investors a few days after the event. "I apologize. I don't want to find any excuses. I need more hard work."

By 2009, Oversea Chinese and WinWin had attracted more than 200 investors who invested roughly $75-million (U.S.) in total, according to court filings. The minimum investment was $150,000 (Canadian) in Oversea Chinese and $250,000 (U.S.) in WinWin. Mr. Tang did not charge a fee on the first 6 per cent of profit, but he took a 25-per-cent cut of any additional profit, according to court filings.

Madoff May Plead Guilty

It appears that Bernard Madoff may be nearing a plea deal with prosecutors. Madoff was arrested on Dec. 11, 2008 and charged with securities fraud for his leading role in an estimated $50 billion Ponzi scheme. According to Bloomberg, "Assistant U.S. Attorney Marc Litt today filed a one-page document in Manhattan federal court indicating the government will file an “information,” or charging document, after Madoff agrees to waive a grand jury indictment. Defendants who agree to plead guilty to an information often first waive indictment."

According to a former SEC attorney interviewd by Bloomberg, "“Madoff is about to enter his guilty plea. A criminal information is a consented- to criminal charge used to enter a guilty plea.”

The document released today byt the US Attorney's Office does not indicate if Madoff will waive indictment.

In related news today, the SEC announced it has plans to revamp its whistle-blower policy in wake of the Madoff fraud (and presumably the Stanford CD fraud as well). This comes after years of lax enforcement and a culture which seemingly did little to encourage whistle blowers to come forward.

Mini-Madoff - Ex-Car Salesman's Hedge Fund Ponzi Scheme

Rod Stringer, a former car salesman from West-Texas was running a Ponzi scheme similar in some ways to that of Bernie Madoff's famous scam. However, the magnitude of the losses from Stringer's hedge fund is far smaller. The $45 million fund reported annual returns as high as 60%, a number the SEC claims is completely bogus.

Among Stringer's 31 clients were many elderly investors. The SEC notes that the location of the remaining funds is unknown at this time.