SEC v. Luca International Group, LLC et al.,

Civil Action No. 3:15-cv- 03101-CRB (N.D. Cal.) 

In the Matter of Wisteria Global, Inc., et al. 

Admin. Proc. File No. 3-16675

On July 6, 2015, the Commission filed a Complaint against Luca International Group, LLC; Luca Resources Group, LLC; Luca Energy Fund, LLC; Entholpy EMC, Inc.; Bingqing Yang (“Yang”); Lei (Lily) Lei (“Lei”); Anthony V. Pollace (“Pollace”); and Yong (Michael) Chen (collectively, the “Defendants”) and against Luca Operation, LLC; Luca Barnett Shale Joint Venture; Luca To-Kalon Energy, LLC; Luca Oil, LLC; Luca I, Limited Partnership; Luca Oil II Joint Venture (collectively, the “Luca Relief Defendants”); J&Q Int'l Trading, Inc.; Skyline Trading, LLC; and Xiang Long Zhou (together with the Luca Relief Defendants, the “Relief Defendants”). The Commission alleged that, from 2007 through at least 2014, Yang through her wholly-owned management companies orchestrated a $68 million affinity fraud which targeted the Chinese American community, as well as investors in Asia, to invest in unregistered offerings of a series of investment funds. Yang and Lei represented to investors that their money would be invested in oil and gas drilling operations yielding annual rates of return of 20-30% and guaranteeing 12-15% returns to some investors. Yang comingled investor funds and used new investor money to make sham profit payments to earlier investors while diverting millions of dollars for her personal use. See the Commission’s Complaint.

On June 20, 2016, the Court entered a final judgment as to Pollace finding him liable for a civil penalty of $25,500. See Pollace’s Final Judgment. On October 25, 2019, the Court entered a final judgment as to Lei finding her liable for disgorgement of $464,190 together with prejudgment interest of $28,293 and a civil penalty of $35,000. See Lei’s Final Judgment. On June 26, 2020, the Court entered a final judgment as to Chen and Entholpy EMC, Inc. finding them each jointly and severally liable for disgorgement of $457,100 together with prejudgment interest of $27,775 and a civil penalty of $35,000. See Chen and Entholopy EMC, Inc.’s Final Judgment. On June 9, 2021, the Court entered a final judgment as to Yang for disgorgement of $209,672 together with prejudgment interest of $64,579 and a civil penalty of $425,749. See Yang’s Final Judgment. On July 26, 2016, the Court entered final judgment as to Defendants Luca International Group, LLC; Luca Resources Group, LLC; Luca Energy Fund, LLC; and Relief Defendant Luca Operation, LLC finding them jointly and severally liable for disgorgement in the amount of $68.3 million. In that pleading the Court also entered final judgment as to Relief Defendants Luca Barnett Shale Joint Venture, Luca Oil, LLC, Luca To-Kalon Energy, LLC, Luca I, Limited Partnership, and Luca Oil II Joint Venture for disgorgement in varying amounts from $2.4 million to $41 million jointly and severally with the Defendants and Relief Defendant Luca Operation. To date, no payments have been received from these Defendants and Relief Defendants. The Court further ordered the Defendants’ and Relief Defendants’ obligation to pay was limited to the amounts received on the Commission’s $68.3 million claim made in In re: Luca International Group, LLC, Case No. 15-34221-H2-11 (Bankr. S.D. Tex.) See the Luca Final Judgment.

In a related administrative proceeding, In the Matter of Wisteria Global, Inc., et al., Admin. Proc. File No. 3-16675, the Commission ordered Wisteria Global, Inc. and Hiroshi Fujigami (the “Respondents”) to disgorge $1,138,985. The Respondents paid in full, and in accordance with the Commission’s Order, the funds collected have been combined with the funds collected pursuant to the Final Judgments. See the Commission’s Order: Release No. 34-75362.

As of January 2023, the Commission held a total of $1,794,340.30 collected from the Defendants pursuant to their respective Final Judgments and from the Respondents in the related administrative proceeding, in a Commission-designated account at the U.S. Department of the Treasury (the “Fund”). Any further collections received pursuant to the Final Judgments, and any accrued interest will be added to the fund for the benefit of harmed investors.

On February 27, 2023, the Court entered an order appointing Heffler, Radetich & Saitta, LLP, as the Tax Administrator to fulfil the tax obligations of the Fund, and authorized the Commission to approve and make arrangements to pay any tax obligations of the Fund and the Tax Administrator’s fees and expenses directly from the Fund without further order of the Court. See Court Order.

On July 13, 2023, the Court entered an order creating a Fair Fund for the monies held in the Fund, along with any additional funds collected from the Defendants and/or Relief Defendants (the “Fair Fund”); appointing KCC Class Action Services, LLC as the Distribution Agent of the Fair Fund to oversee the administration and distribution of the Fair Fund to harmed investors in accordance with a distribution plan to be approved by the Court; and authorizing the Commission to approve and make arrangements to pay the Distribution Agent’s fees and expenses directly from the Fair Fund without further order of the Court. See the SEC’s Motion and the Court Order.

On July 3, 2024, the Commission filed a motion for an order approving a distribution plan to distribute the Fair Fund to investors who were harmed by the Defendants’ conduct alleged in the Complaint, in connection with investments in unregistered offering. See SEC’s Motion.

On August 20, 2024, the Court entered an Order to Approve a Distribution Plan for the Fair Fund. See Court Order and the Plan.

For more information, please contact the Commission:

Office of Distributions
Email: ENFOfficeofDistributions@sec.gov