SEC accuses two San Diego men in $61 million in Ponzi scheme
The U.S. Securities and Exchange Commission has filed a civil complaint against two San Diego men for allegedly running a $61.5 million Ponzi scheme that defrauded more than 350 investors across multiple states.
The lawsuit filed in San Diego federal court last week accuses Jonny Ngo, 32, and Donato “Mick” Baca Jr., 36, of raising money from investors between 2013 and 2017 that was supposedly used to buy bulk electronics such as iPhone screens and drones overseas. These products were supposedly distributed in the U.S. and sold at a substantial profit.
According to the SEC, the men promised investors returns of 5 percent to 15 percent every two weeks to 45 days through Ngo’s wholesale technology import business – NL Technology LLC.
NL Technology has a storefront in San Diego offering cellphone and computer repairs, but it engaged in little or no wholesale import business activity, according to the SEC.
The complaint alleges Ngo and Baca used money raised by new investors to pay prior investors in a classic Ponzi scheme. About $52 million was distributed in this way.
The SEC claims the rest went to fund Ngo’s and Baca’s “extravagant lifestyles, including gambling and purchasing luxury cars, watches and homes.”
To conceal the scheme, the SEC claims Ngo fabricated bank statements and financial records, forged invoices and created phony email addresses. He also impersonated people with whom NL Technology was supposedly doing business.
Baca owned MR Media and claimed to be an investor who helped gather other investors. Later, he said he held various executive positions at NL Technology.
The scheme began to fall apart in April 2017, according to the SEC. Ngo and Baca stopped paying most investors, claiming delays were due to switching banks, supplier problems and an SEC audit.
When a major investor uncovered the scheme in May 2017, Baca disavowed knowledge but did not inform other investors. Instead, Baca told investors he was leaving NL Technology but they could invest directly with Ngo, according to the complaint.
Ngo has settled with the SEC without admitting wrongdoing. The final judgment prohibits him from raising money from prospective investors in connection with any offering of securities, and it orders him to repay $4.5 million. He also must pay a $480,000 civil penalty and $245,726 in pre-judgment interest.
According to the SEC, Baca personally misappropriated at least $4.7 million of investor funds, including funds paid to MR Media. The SEC claims the money was used for rent, luxury watches, and payments on personal credit cards. Investor funds also were used for a down payment on a $3.5 million home.
The SEC lawsuit is seeking return of ill-gotten gains, civil penalties and interest and an injunction to prevent fund raising from investors.
Business
mike.freeman@sduniontribune.com;
760-529-4973
