Irvine CEO hit by fraud claims
The top executive of an Orange County investment management company has relinquished control of the firm amid allegations that he defrauded clients.
Irvine-based Private Equity Management Group Inc. said in a statement that Danny Pang had “voluntarily stepped aside” as chairman and chief executive while the firm conducts an internal probe of its operations, “including its investment management policies and procedures.” The firm said its chief financial officer, Wilbur Quon, also stepped down.
In addition, the Securities and Exchange Commission and the U.S. attorney’s office in Los Angeles are seeking information about Pang and the firm, also known as PEMGroup.
The inquiries follow published reports this week of allegations by a former PEMGroup executive that Pang misused investors’ money and misrepresented his professional and educational background.
Attempts to reach Pang on Friday were unsuccessful. A spokesman for PEMGroup declined to comment beyond its statement, although the company and Pang have previously denied any wrongdoing.
Pang may be best known locally for the highly publicized 1997 murder case in which his wife, Janie Pang, a 33-year-old former stripper, was shot to death in the bedroom of the couple’s upscale Villa Park home. Newport Beach attorney Hugh “Randy” McDonald was charged with the slaying, but his 2002 trial ended in a hung jury and he was never retried.
During the trial, McDonald’s lawyers portrayed Danny Pang as a shady businessman and high-stakes gambler and contended that prosecutors ignored evidence suggesting he had ties to Taiwanese mobsters.
Many of the current allegations against Pang have been leveled by Nasar Aboubakare, who says he joined PEMGroup in 2001 and served as the firm’s president before being ousted in August 2007.
Jeffrey Benise, a Costa Mesa attorney who represents Aboubakare, said the SEC and U.S. attorney asked to meet with him and his client after Aboubakare’s charges were reported by the Wall Street Journal.
The SEC and U.S. attorney’s office declined to comment.
In a breach-of-contract lawsuit filed last year against Pang and PEMGroup, Aboubakare said he invested $900,000 in the investment partnership by early 2001. The firm raised much of its money from clients in Pang’s native Taiwan, investing in corporate debt and life insurance policies, among other things.
An online profile of the firm said it had $4 billion in assets, although Benise said the firm probably had no more than $700 million in invested capital.
According to Aboubakare, Pang improperly billed clients for millions in legal fees and insurance costs. He also alleged that Pang told him that at least some of PEMGroup’s operations amounted to a Ponzi scheme -- a type of scam in which longtime investors are paid with funds from new investors, rather than with actual investment profits.
Aboubakare also alleged that Pang lied about his work history and falsely said he received degrees from UC Irvine. A UCI spokeswoman said Friday that Pang did not receive a degree from the university.
Aboubakare, who says he was fired by PEMGroup after being falsely accused of sexual harassment and taking kickbacks, is seeking at least $50 million in damages.
Robert Anderson, formerly PEMGroup’s chief operating officer, has been named interim chairman of the firm. Anderson and another PEMGroup employee will serve as the special investigative committee.
PEMGroup “takes very seriously the trust its clients have placed in it,” Anderson said in a statement, “and as such, we intend to fully investigate allegations and issues raised.”
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