U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21045 / May 18, 2009
Securities and Exchange Commission v. Sun Group, et al., United States District Court for the Central District of California, Civil Action No. SACV 09-399 DOC (RNBx)
SEC HALTS MULTI-MILLION DOLLAR INVESTMENT SCHEME RUN BY A PURPORTED SAVINGS AND LOAN AND ITS PRINCIPALS
On May 13, 2009, the Securities and Exchange Commission charged two Northern California residents and two of their companies, one of which is a purported savings and loan association, with securities fraud in connection with a multi-level marketing scheme. The SEC obtained an emergency court order freezing their assets and halting the scheme.
The SEC alleges that Bich Quyen Nguyen, Johnny E. Johnson, and their entities, Sun Group and Sun Investment Savings and Loan, raised more than $9 million by promising guaranteed returns on high-yield instruments. The SEC had previously charged two other entities, Empire Capital Asset Management ("ECAM"), and Sun Empire, and two individuals, Delilah Proctor and Shauntel McCoy, for also participating in the multi-level marketing scheme. Instead, the amended complaint alleges that the defendants misused investor funds for their own personal use or sent money to other entities under their control.
According to the SEC's amended complaint, Nguyen solicited investors through Sun Group and Sun Investment Savings and Loan and encouraged club leaders to find investors who were unemployed or recently bankrupt. Through Sun Investment Savings and Loan, Nguyen offered certificates of deposit with returns as high as 19.30%. Johnson represented to prospective investors that they could double their investment with Sun Group and could earn "many times more than 10% returns." Both Nguyen and Johnson promised a full guarantee for the original investment and profit. In fact, according to the amended complaint, Sun Investment Savings and Loan is not a savings and loan at all. The amended complaint alleges that Sun Investment Savings and Loan does not exist at the purported business location alleged by defendants and was not authorized by the state to do business as a financial institution. Moreover, Sun Investment Savings and Loan has not been paying the promised returns to investors.
The SEC obtained an order (1) freezing the assets of Sun Group, Sun Investment Savings and Loan, Nguyen, and Johnson; (2) requiring accountings; (3) prohibiting the destruction of documents; and (4) granting expedited discovery; and (5) temporarily enjoining Sun Group, Sun Investment Savings and Loan, Nguyen, and Johnson from future violations of the registration and antifraud provisions of the federal securities laws. In addition to this emergency relief, the Commission's complaint alleges that Sun Group, Sun Investment Savings and Loan, Nguyen, and Johnson violated antifraud provisions of the federal securities laws and seeks a final judgment permanently enjoining the defendants and ordering them to pay disgorgement of ill-gotten gains and financial penalties. These orders were in addition to the previously-entered preliminary injunctions against Proctor, McCoy, ECAM, and Sun Empire in Securities and Exchange Commission v. Sun Empire LLC, et al., United States District Court for the Central District of California, Civil Action No. SACV 09-399 DOC (RNBx).
The SEC acknowledges the assistance of the Federal Bureau of Investigation, the United States Attorney's Office, and the California Department of Financial Institutions.