SEC charges RIA in $60 million Ponzi-like scheme
David Hu sold fake loans to pay off earlier investors, the SEC alleges
The Securities and Exchange Commission has charged David Hu, the co-founder and chief investment officer of International Investment Group, a former registered investment adviser based in New York City, with fraud for his role in a $60 million Ponzi-like scheme.
The SEC alleges that Hu orchestrated multiple frauds on IIG’s investment advisory clients, grossly overvaluing the assets in IIG’s flagship hedge fund, resulting in the fund paying inflated fees to IIG.
In addition, the SEC said that Hu allegedly sold at least $60 million in fake trade finance loans to other investors and used the proceeds to pay the redemption requests of earlier investors and other liabilities. The complaint alleges that Hu deceived IIG clients into purchasing these loans by directing others at IIG to create and provide to the clients fake loan documentation to substantiate the nonexistent loans, including fake promissory notes and forged credit agreements.
Last November, the SEC charged IIG with fraud and revoked its RIA registration.
In March, the SEC obtained a final judgment requiring IIG to pay more than $35 million in disgorgement and prejudgment interest.
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