Suit says $4B firm ran a Ponzi scheme
Posted on: Thursday, 16 April 2009, 16:36 CDT
A California lawsuit alleges the Private Equity Management Group run by Danny Pang earns portions of its money through a Ponzi scheme.
Former firm partner Nasar Aboubakare claimed in the suit that Pang earned in excess of $25 million
through a Ponzi scheme in which money from new investors is used to pay dividends to established investors in lieu of legitimate earnings.
Mike Sitrick, a spokesman for the firm, said no additional funds were needed, because the company had sufficient reserves to pay investors.
The firm had always met its principal and interest payments,
he said.
Sitrick described Aboubakare a disgruntled former partner who was fired for having an affair with a subordinate and was sued by Pang on embezzlement charges, the Orange County, Calif., Register reported Thursday.
Aboubakare, in return, said he wanted to get away from PEM Group,
because I really thought it was a Ponzi scheme.
The Wall Street Journal reported the firm manages $4 billion, but Aboubakare estimated the firm's value is between $250 million and $350 million, the Register said.
Source: United Press International
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