SEC Stops Alleged Hedge Fund Fraud Before It Even Starts

Apr 26 2011 | 12:44pm ET

These days, it's hard to set records in hedge fund fraud. But a Beverly Hills, Calif., firm may have done just that—as the shortest-lived and least-lucrative alleged scam in history.

The Securities and Exchange Commission yesterday won an emergency order shutting down IU Group after the regulator said it found "flagrant misrepresentations" on the part of the firm to potential investors. Luckily for those potential investors, the SEC said it appears to have stopped IU before any of them became actual victims; the agency said it has not uncovered any evidence of either investors or investments at the firm, headed by Elijah Bang and Daniel Lee.

That didn't stop the two men from claiming a four-year successful track record for a firm allegedly started last year, nor from claiming more than $800 million in assets under management, the SEC said. Bang and Elijah, who in 2009 were ordered by California authorities to stop their allegedly illegal and fraudulent sales of securities, also allegedly claimed that most of their investors were professional athletes, actors, producers, doctors, professors, politicians and corporate executives.

The pitch that got them shut down was more modest, seeking investors among retirees, professors and Christians. On several Web sites flogging their allegedly non-existent wares, Bang and Lee claimed to be "devoted Christians who believe in God, Jesus Christ and the Holy Spirit."

In addition to the emergency order, the SEC has also filed civil charges against the two men. Both may also face criminal charges in California.


In Depth

Humble in Hofstra...One Debate an Election Can Make

Sep 26 2016 | 10:20am ET

Tonight's U.S. Presidential debate, infamously coined the “Humbling in Hofstra...

Lifestyle

Quattrex Sports AG Debuts Soccer-Focused UCITS Fund

Sep 9 2016 | 9:54pm ET

Innovative alternative investment company Quattrex Sports has unveiled a new UCITS...

Guest Contributor

Malik: The Ever-Changing Middle Market and The Entering Class of 2016

Sep 2 2016 | 5:01pm ET

Deal sourcing and origination is only going to get more competitive given current...