Accused O.C. financier Pang hurls his own allegations

Orange County financier Danny Pang, accused of defrauding investors of hundreds of millions of dollars, said Tuesday that authorities wrongly seized his firm and other assets based solely on a complaint from a “disgruntled former employee” who had tried to “shake down Mr. Pang’s company.”

In a motion filed in U.S. District Court in Los Angeles, Pang asserted that Nasar Aboubakare, former president of Pang’s Irvine-based Private Equity Management Group Inc., embezzled $3 million from the firm. The motion also alleges that Aboubakare now runs a competing firm and has offered to retract his claims in return for payment from Pang.

Pang’s filing asks the court to dismiss a temporary restraining order imposed on Pang after he was sued April 27 by the Securities and Exchange Commission. The order froze Pang’s assets and directed him to surrender his passport.

“It was fundamentally wrong, and against the bedrock principles of our legal system, for the SEC to have filed this action in secret and to have seized Mr. Pang’s business and all of his assets without ever giving him a chance to be heard,” said David Schindler, one of Pang’s attorneys. “Mr. Pang is confident that he will be vindicated.”

In its lawsuit, the SEC accused Pang of running a Ponzi scheme, in which money from new investors is used to pay profits to earlier investors. It also said he falsified his education and career histories.

The SEC sued Pang and his firm, known as PEMGroup, after published reports described a breach-of-contract suit brought against Pang by Aboubakare. That suit alleges that Pang told Aboubakare that at least part of PEMGroup’s operation amounted to a Ponzi scheme.

Aboubakare’s attorney, Jeffrey Benice, said Tuesday that the $3-million embezzlement alleged by Pang was a disputed commission that Aboubakare received from PEMGroup and later repaid. Allegations regarding hush money apparently refer to a confidentiality agreement that would have been included in a proposed settlement of Aboubakare’s suit against PEMGroup, Benice said.

“The only liar here is a guy who posts on a website and notes in SEC filings false educational credentials that he uses to portray himself as an expert to innocent investors,” Benice said.

UC Irvine has confirmed that Pang never received a degree there, despite his claims in promotional materials and regulatory filings that he graduated from the university.

Pang’s motion also accuses the SEC of acting too hastily, suggesting that the agency, embarrassed by its failure to uncover the massive Ponzi scheme run by Bernard Madoff, “created the illusion of an emergency in order to seize an ongoing business and to vilify defendant Danny Pang as the next Bernard Madoff.”

A court-ordered review of Pang’s business has found no evidence of a Ponzi scheme, the motion contends. It also notes that Pang’s investors were Taiwanese banks -- not “mom and pop investors about to invest their life savings.”

An SEC spokeswoman declined to comment on the motion but said the agency would file court papers Thursday in support of the injunction against Pang.

The SEC charges are civil. Pang was arrested last week on a criminal charge of violating currency reporting laws. U.S. Magistrate Judge Robert N. Block declined federal prosecutors’ request that Pang be jailed without bond, saying the government had not demonstrated that Pang had stolen from clients or was a significant flight risk. Pang was released on a $1-million bond. He can leave his house only for work, meetings with attorneys or medical appointments.

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martin.zimmerman@latimes.com