U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23594 / July 8, 2016
Securities and Exchange Commission v. CKB168 Holdings Ltd., et al., Civil Action No. 1:13-cv-5584 (E.D.N.Y. filed Oct. 9, 2013)
Two Defendants Settle Charges That They Participated in Pyramid Scheme Targeting Asian-American Community
The Securities and Exchange Commission announced that on June 29, 2016, the U.S. District Court for the Eastern District of New York entered final judgments against Cheongwha "Heywood" Chang and Toni Tong Chen and relief defendants HTC Consulting LLC ("HTC") and Arcadia Business Consulting, Inc. ("Arcadia").
On October 9, 2013 the SEC charged 16 defendants, including Chang and Chen, 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 Chang and Chen, 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.
Defendants Chang and Chen consented to the entry of the settled judgments, which permanently enjoin each of them from violating the unregistered offering 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 unregistered broker-dealer provisions of Section 15(a) of the Exchange Act. Chang and Chen also agreed to conduct-based injunctions that prohibit each of them from participating in an illegal pyramid scheme disguised as a multi-level marketing program. In settling the SEC's charges against them, Chen and Chang each acknowledged having entered into written agreements to plead guilty in a parallel criminal action in which they each admitted that CKB was an investment scheme. Chang, Chen, and their associated relief defendants, HTC and Arcadia, have agreed to pay, jointly and severally, disgorgement and applicable interest totaling $2,101,949.81. The judgments also order Chang and Chen to pay civil penalties in amounts to be determined at a later date by the court upon the SEC's motion.
In related administrative proceedings instituted today, Chang and Chen agreed to permanent associational, industry and penny stock bars, and Chen agreed to be permanently suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies.
The SEC's litigation in this matter continues against the remaining individual defendants. The five corporate defendants have defaulted.
For further information on this action, please see Press Release No. 2013-223, Litigation Release Nos. 22846 and 23306, and Administrative Proceeding File Nos. 34-78268/3-17328, 34-78269/3-17329 and 34-78270/3-17330.