HSBC Bank is accused of helping financier Danny Pang defraud investors
A court-appointed receiver has filed a lawsuit accusing HSBC Bank USA of helping Newport Beach financier Danny Pang defraud Taiwanese investors of hundreds of millions of dollars.
The lawsuit, filed Friday at the federal courthouse in Los Angeles, seeks to recover more than $1.8 million in fees that HSBC received for acting as a cash custodian for Pang’s company, PEMGroup, before the Securities and Exchange Commission shut it down last year. Pang, 42, committed suicide in September while awaiting prosecution on federal criminal charges.
Court-appointed receiver Robert P. Mosier has concluded that PEMGroup took in more than $950 million from investors, mainly Taiwanese banks and wealthy individuals, and that $823 million is missing. He filed the lawsuit against HSBC as part of an effort to recover funds for investors.
The lawsuit alleges that HSBC conspired with Pang to produce misleading reports about the value of his funds in an effort “to induce investors to maintain their investments.”
HSBC did not respond to a request for comment.
Mosier said that HSBC, acting at PEMGroup’s request, transferred millions of dollars of investor funds to noncustodial accounts — a sign that the bank “had firsthand knowledge of where the funds were being expended.”
In a report issued last May, Mosier accused Pang of treating investor money as a “personal piggy bank” that funded luxuries including a $35-million fleet of private jets and million-dollar cruises and vacations. He said records indicated that Pang made interest payments to existing investors with new investor money, “giving rise to claims of a Ponzi scheme.”
Pang was under house arrest in Newport Beach when he committed suicide. He had been charged with making a series of bank transactions for just below the $10,000 amount that would trigger reports to the Internal Revenue Service — a requirement aimed at preventing money laundering.
