(HedgeCo.Net) The U.S. District Court for the Eastern District of New York has entered a final judgment against defendant Heidi Mao in a previously filed civil action that charged Mao with promoting investments in a fraudulent pyramid scheme.
The SEC’s complaint, filed on October 9, 2013, charged 16 defendants, including Mao, with perpetrating a worldwide pyramid scheme. According to the SEC’s complaint, through the efforts of three CKB executives who live overseas and top promoters living in the U.S., including Mao, the scheme ensnared investors in New York, California, and other areas with large Asian-American communities. The executives and promoters collectively raised tens of millions of dollars from investors in the United States, Canada, Taiwan, Hong Kong, and other countries in Asia.
Without admitting or denying the allegations of the complaint, Mao consented to the entry of the judgment, which permanently enjoins her from violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, the anti-fraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the broker-dealer registration provisions of Section 15(a) of the Exchange Act. Mao also agreed to conduct-based injunctions that prohibit her from participating in an illegal pyramid scheme disguised as a multi-level marketing program. The final judgment orders Mao to pay disgorgement of $449,729 and a civil penalty of $335,000.
In related administrative proceedings instituted today, the SEC issued an order permanently barring Mao from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock.
The SEC has now obtained judgments of liability against all the individual defendants. The five corporate defendants have defaulted. The SEC continues to litigate to obtain final judgments against the remaining non-settling defendants and the corporate defendants.