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2 Bay Area men, running Pleasanton companies, charged with $80M Ponzi scheme

Securities and Exchange Commission alleges men targeted 500 Korean-American investors

The San Francisco bureau of the Securities and Exchange Commission has filed a complaint against the operators of two Pleasanton companies with an $80-million Ponzi scheme.

It's the second large-scale Ponzi scheme involving Pleasanton alleged by the federal agency in the past three months. In March, the SEC alleged that Pleasanton resident Kenneth Kenitzer, 66, and former Pleasanton resident Anthony Vassallo, 29, of Folsom, Calif., defrauded 150 investors of $40 million.

In the most recent complaint, the SEC said the men targeted Korean-American investors with false promises of extraordinarily high returns from foreign currency (forex) trading. The SEC alleges that Peter C. Son of Danville and Jin K. Chung of Los Altos lured approximately 500 investors in the United States, South Korea, and Taiwan into their investment scheme in which funds were not traded in the forex market as claimed, but instead used to pay cash "returns" to certain investors in Ponzi-like fashion. The agency further claims that the men "misappropriated investor money for their own personal use, including mortgage payments on Son's multi-million dollar home."

"Son and Chung portrayed themselves and their companies as highly successful in the forex industry, while in reality the tremendous forex trading profits they claimed did not exist," said Marc Fagel, director of the SEC's San Francisco Regional Office. "They placed ads in Korean-language newspapers and used sales agents to target Korean-Americans in typical affinity fraud fashion as they preyed on the trust within close-knit communities."

According to the SEC's complaint, filed in federal district court in San Francisco, Son, 37, and Chung, 46, operated their scheme through SNC Asset Management, Inc. (SNCA) and SNC Investments, Inc. (SNCI), which maintained offices in Pleasanton, and New York City.

The SEC alleges that Son and Chung faked SNCA's supposed forex trading profits, providing investors with monthly account statements showing fictitious returns. Son and Chung drained SNCA's and SNCI's bank accounts as their Ponzi scheme was collapsing and transferred investor funds to accounts they controlled overseas, the complaint said. In addition to paying Son's mortgage, investor funds were used to provide capital infusions to SNCI and pay Son's wife a salary for which she did no work, according to the complaint.

The SEC is seeking court orders prohibiting the defendants from engaging in future violations of the antifraud provisions of the federal securities laws; freezing their assets and compelling them to return overseas assets to the U.S.; and requiring them to disgorge their ill-gotten gains and pay financial penalties.

Son appeared in federal court in Oakland Tuesday on federal criminal charges. Separately on Wednesday, the Commodity Futures Trading Commission announced civil fraud charges against Son, Chung, SNCA and SNCI, according to the SEC.

This is the third piece of civil action filed by the SEC relating to Pleasanton. Last month, the agency charged Emile Jilwan, 54, and Joseph Azar, 49, both of Pleasanton, with an insider trading scheme valued at $6 million.

To view the details in the complaint, visit www.sec.gov/litigation/complaints/2009/comp21076.pdf

Comments

Posted by Dave, a resident of Vineyard Hills
on Jun 10, 2009 at 3:50 pm

California Republicans Anthony Vassallo and Kenneth Kenitzer, loved the freedom from financial regulation the Bush Regime afforded them that they donated generously to the RNC and NRCC and to their favorite candidate, Mitt Romney... all the while conducting a ponzi scheme much like Madoff's only smaller. They only ripped off $40 million dollars. I wonder if Romney will return the money they gave him.

Web Link




Posted by Cholo, a resident of Livermore
on Jun 10, 2009 at 5:55 pm

BUSTED REPUBLICANS! HAHAHAHAHAHAHAHAHAHAHAAHAHHAHA...


Posted by Pleasanton resident, a resident of Another Pleasanton neighborhood
on Jun 10, 2009 at 6:07 pm

Idiots. When will they learn the Government doesn't like the competition?


Posted by Privatize, a resident of another community
on Jun 10, 2009 at 9:22 pm

I'LL BET THEY'RE PRODUCTS OF THE PUBLIC SCHOOL SYSTEM.


Posted by Curious George, a resident of Another Pleasanton neighborhood
on Jun 11, 2009 at 8:47 am

I wonder how they voted on Measure G?


Posted by Forest, a resident of Foothill Farms
on Jun 11, 2009 at 11:06 am

Typical Republican greed, nothing new.


Posted by Pleasanton resident, a resident of Another Pleasanton neighborhood
on Jun 11, 2009 at 11:44 am

Yes, only Republicans are greedy. Our local Democrats, namely our senators and congressional speaker don't make a dime off the trillions in pork we taxpayers have to foot the bill for. And we could spend all day on Fannie Mae and the hundreds of millions in bonuses to Democrats like Gorelick and Raines...and how much are the taxpayers footing the bill for that mess?

The ignorance of Dave and Forest are what happens in a society where the media and education system parrot the values and beliefs of the Democratic party. A healthy democracy (and republic, which is what we are) depends on an informed public to operate well, and judging from the current state of economic affairs, we obviously fail in this area.


Posted by Forest, a resident of Foothill Farms
on Jun 11, 2009 at 12:18 pm

Pleasanton resident,

Lay off all the Republican talking points. Lets not forget all this mess started during the Bush Era. The ignorance of "Pleasanton resident" is what happens when you listen to Fox News and AM Radio all day. Have fun in your little Rush Limbaugh World.


Posted by Cholo, a resident of Livermore
on Jun 11, 2009 at 8:43 pm

GREEDY Conservative Republican GOONS strike again! BUSTED...HAHAHAHAHAHAHAHAHHAHA...


Posted by Pleasanton resident, a resident of Another Pleasanton neighborhood
on Jun 19, 2009 at 4:19 pm

This thing is still on the front page? And Forest, is that the best you can do? Pathetic, I'm laughing at you.


Posted by Foothill High School, a resident of Foothill Knolls
on Jul 1, 2009 at 8:51 pm

Anthony Vassallo? I feel sorry not only for the idiots involved in the investments, but for Anthony's wife- Melissa McCleod and their kids.

What a disgrace to Pleasanton and its residents.


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