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U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 20189 / July 10, 2007

SEC v. TG Capital, LLC, Thanh Viet "Jeremy" Cao, and Lodavina Grosnickle, Case No. CV 07-579 CJC (ANx) (C.D. Cal.)

SEC Halts Ongoing Investment Scam Involving Forged Bank Guarantees

The Securities and Exchange Commission filed an emergency action on May 22, 2007 against two Californians and their company to halt an ongoing fraudulent scheme operated in Orange County, Calif., in which the defendants raised at least $3.7 million from approximately 33 investors.

The Honorable Cormac J. Carney, United States District Judge for the Central District of California, entered a temporary restraining order freezing the assets of TG Capital, LLC, a Nevada limited liability company, Thanh Viet Jeremy Cao, age 26, of Orange County, Calif. and Las Vegas, Nev., and Lodavina Grosnickle, age 51, of Chula Vista, Calif. The Commission's complaint alleges that from February 2007 to the present, Cao and Grosnickle lured investors to invest in TG Capital by falsely promising rates of return between 28% and 30% on their investment and assuring investors that TG Capital's investments were secured by guarantees from major banks or gold. In fact, no such guarantees existed. The complaint also alleges that Cao forged at least one bank guarantee to support his false claims.

The complaint further alleges that Cao and Grosnickle recently transferred $1.78 million of investor funds to a bank in Hong Kong, purportedly to make a personal loan from Cao to an individual. The Commission alleges that defendants falsely represented the overseas transfer was a legitimate TG Capital investment when in fact, Cao personally loaned the money, leaving TG Capital investors with no recourse if the individual borrower defaults.

In addition to ordering an asset freeze, the court's order requires defendants to repatriate assets sent overseas, provides for certain expedited discovery, and prohibits them from destroying evidence. The court ordered the temporary restraining order and asset freeze to remain in effect until June 4, 2007. In addition to this emergency relief, the Commission is seeking a permanent injunction enjoining the defendants from committing future violations of the securities laws, and ordering disgorgement of the ill-gotten gains with prejudgment interest, and civil monetary penalties.

The Commission's complaint alleges that all defendants violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and that Grosnickle also violated Section 15(a) of the Exchange Act.

SEC Complaint in this matter

 

http://www.sec.gov/litigation/litreleases/2007/lr20189.htm


Modified: 07/10/2007