SEC Charges San Diego Technology Repair Company, Business Partners in Ponzi Scheme
Litigation Release No. 24293 / September 28, 2018
Securities and Exchange Commission v. NL Technology, LLC et al., No. 3:18-cv-02253 (S.D. Cal. filed Sept. 27, 2018)
The Securities and Exchange Commission today charged a San Diego company, its president, and his business partner with running a multimillion dollar Ponzi scheme that defrauded hundreds of individual investors.
According to the SEC's complaint, Jonny Ngo and Donato "Mick" Baca, Jr., raised more than $61 million from over 350 investors between 2013 and 2017, falsely promising to use the money for a wholesale technology import business operating under the name of Ngo's company, NL Technology, LLC. They enticed investors with exorbitant returns of 5% to 15% over a period of two weeks to 45 days. In reality, no such wholesale business existed; instead, Ngo and Baca used the money to pay prior investors and to fund their extravagant lifestyles, including gambling and purchasing luxury cars, watches, and homes. The complaint further alleges that Ngo fabricated bank statements, financial records, and other documents, and impersonated third parties in order to conceal the fraud, and that Baca disseminated some of those fabricated documents to investors.
The SEC's complaint, filed in federal court in the Southern District of California, charges NL Technology, Ngo, and Baca with violating 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, as well as the registration provisions of Sections 5(a) and 5(c) of the Securities Act. The SEC's complaint seeks injunctive relief, disgorgement of ill-gotten gains plus pre-judgment interest, and civil penalties.
Ngo and NL Technology have agreed to settle with the SEC. Without admitting or denying the allegations in the SEC's complaint, Ngo and NL Technology consented to the entry of final judgments enjoining them from violating the above provisions of the federal securities laws. The final judgment against Ngo also prohibits him from soliciting, accepting, or depositing any monies from actual or prospective investors in connection with any offering of securities, and orders him to disgorge $4.5 million of ill-gotten gains along with $245,726 in prejudgment interest and pay a $480,000 civil penalty.
The SEC's investigation was conducted by Patricia Pei and supervised by Ansu N. Banerjee. The SEC's litigation will be led by Lynn Dean.