MIL-OSI USA: New York Man Convicted of Federal Fraud Charges Related to Multi-Million Dollar Pyramid Scheme that Targeted Chinese-Americans

By   /  September 15, 2018  /  Comments Off on MIL-OSI USA: New York Man Convicted of Federal Fraud Charges Related to Multi-Million Dollar Pyramid Scheme that Targeted Chinese-Americans

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Source: US State of California

          LOS ANGELES – A federal jury has returned guilty verdicts against a New York man who was a high-level promoter of a fraudulent company that solicited more than $200 million for a company that purported to market web-based children’s educational courses, but in reality was nothing more than a pyramid scheme.

          Daliang “David” Guo, 55, of Hyde Park, New York, was convicted Thursday afternoon of conspiracy and nine counts of wire fraud for participating in the scheme that solicited investments primarily from members of Chinese-American communities in Los Angeles, San Francisco and New York City.

          Guo and other members of the conspiracy made false representations about the company – known as CKB 168, but also sometimes known as CKBMax and Cyber Kids Best Education Limited – including claiming that it generated substantial revenues from the sale of courses, that investments could be quickly liquidated for significant returns, that investors would get pre-IPO shares of CKB, and that the company would go public through an IPO. The evidence presented at trial showed that, in reality, the only way for investors to earn any meaningful returns was for them to actively recruit new investors.

          Guo and his co-conspirators promoted CKB through YouTube videos and other postings on the internet, as well as through meetings with prospective investors and live presentations about the purported investment opportunity.

          Four other defendants charged in this case previously pleaded guilty and are pending sentencing. They are:

  • Cheong Wha “Heywood” Chang, 50, formerly of Hacienda Heights;

  • Chang’s wife, Toni Chen, 49;

  • Wen Chen “Wendy” Lee, 56, formerly of Rowland Heights; and

  • Chih Hsuan “Kiki” Lin, 53, formerly of Los Angeles and Las Vegas.

          During the course of the scheme, which ran from mid-2011 until January 2014, Guo and his co-conspirators solicited investments in increments of $1,380, which gave investors “Profit Reward Points” they claimed were worth $750 in cash, would only increase in value, and could be converted to pre-IPO shares of CKB. Guo and his co-conspirators collected money from new investors and simply pocketed the cash to pay themselves the “commission” they earned from CKB, and lulled investors by providing them with essentially worthless Profit Reward Points.

          Guo and his group of promoters collected approximately $142 million out of the more than $200 million raised by CKB from investors.

          Guo is scheduled to be sentenced by United States District Judge Dale S. Fischer on January 14, 2019, at which time he will face a statutory maximum sentence of five years in federal prison for the conspiracy count and up to 20 years in prison for each of the wire fraud charges.

          This case is the result of an investigation by the Federal Bureau of Investigation.

          The Securities and Exchange Commission provided valuable assistance.

          The case against Guo was tried by Assistant United States Attorneys Jill Feeney and Ann C. Kim of the Major Frauds Section.

MIL OSI USA News

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