SEC Obtains Final Judgment Against Remaining Ckb Defendants Ordering Payments of More Than $220 Million in International Pyramid Scheme
Litigation Release No. 25474 / August 17, 2022
Securities and Exchange Commission v. CKB168 Holdings Ltd., et al., No. 1:13-cv-5584 (E.D.N.Y. filed Oct. 9, 2013)
On August 12, 2022, the U.S. District Court for the Eastern District of New York entered a final judgment against defendants CKB168 Holdings Ltd. ("CKB"), WIN168 Biz Solutions Ltd. ("WIN"), CKB168 Ltd. ("CKB168"), CKB168 Biz Solution, Inc. ("Biz Solution"), Cyber Kids Best Education Ltd. ("Cyber Kids"), Rayla Melchor Santos ("Santos"), Hung Wai "Howard" Shern ("Shern"), Rui Ling "Florence" Leung ("Leung"), Daliang "David" Guo ("Guo"), Yao Lin ("Lin"), and Joan Congyi "JC" Ma ("Ma"), and relief defendants Rosanna LS Inc. ("Rosanna") and Ouni International Trading, Inc. ("Ouni").
The SEC's complaint, filed on October 9, 2013, charged 16 defendants with perpetrating a worldwide pyramid scheme from mid-2011 through October 2013. According to the SEC's complaint, three CKB executives, Santos, Shern, and Leung, together with top promoters living in the U.S., including Guo, Lin, and Ma, orchestrated and carried out the scheme, which 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.
The final judgment permanently enjoins defendants (except Santos, who the Court already enjoined) from violating the securities registration 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. In addition, the final judgment enjoins defendants Shern, Guo, Lin, and Ma from violating the broker-dealer registration provisions of Section 15(a) of the Exchange Act and prohibits each from participating in an illegal pyramid scheme disguised as a multi-level marketing program.
The final judgment orders the entity defendants, CKB, WIN, CKB168, Biz Solution, and Cyber Kids, together with CKB executives, Shern and Leung, to pay, jointly and severally, disgorgement and prejudgment interest totaling $178,749,545. In addition, Shern and Leung are each ordered to pay a penalty of $13,700,000, and the entity defendants are each ordered to pay a penalty of $775,000. The final judgment also orders: (1) Guo and relief defendant Rosanna to pay, jointly and severally, disgorgement and prejudgment interest totaling $5,133,651; (2) Lin and relief defendant Ouni to pay, jointly and severally, disgorgement and prejudgment interest totaling $2,359,315, and Lin to pay a penalty of $1,893,114; (3) Ma to pay disgorgement of $975,274 and an equal penalty; and (4) Santos to pay disgorgement and prejudgment interest totaling $883,680 and a penalty of $160,000.
The SEC's litigation was led by Daniel Maher and Devon Leppink Staren and supervised by Olivia Choe and Melissa Armstrong, with further assistance provided by Kam Lee. For further information on this action, please see Press Release No. 2013-223 and Litigation Release Nos. 22846, 23306, 23594, and 25315.