CFTC charges Kay Yang of Mequon for $15.7 million FX scam
She used pool participants’ funds to pay for personal expenses, including over $700,000 at casinos and on gambling-related purchases, more than $439,000 on travel and luxury hotels, and at least $248,000 on cars and car-related expenses.
The Commodity Futures Trading Commission has charged Kay Yang of Mequon with fraud and misappropriation related to an off-exchange foreign currency (forex) trading scheme in which they solicited funds totaling at least $15.7 million from at least 67 investors.
Her companies, AK Equity Group LLC and Xapphire LLC, are also charged while her husband, Chao Yang, is named as a relief defendant for receiving investor funds to which he was not entitled.
The alleged FX scam took place between April 2017 and March 2020, when Kay Yang of Mequon used AK Equity and Xapphire to solicit and pool millions of dollars of investors’ funds in bank and trading accounts for the purported purpose of trading forex.
Used investors’ money for gambling, luxury, and cars
According to the complaint, Kay Yang of Mequon lied to existing and potential pool participants that she successfully managed hundreds of millions of dollars in a variety of investment vehicles, consistently achieved positive monthly returns, and that would allocate 100% of pool participants’ funds to forex trading while adhering to a trading strategy that included low leverage ratios and moderate trading frequencies.
The claims were found to be false as the defendants routinely suffered trading losses using high leverage and high frequency trading strategies, while she used pool participants’ funds to pay for personal expenses, including over $700,000 at casinos and on gambling-related purchases, more than $439,000 on travel and luxury hotels, and at least $248,000 on cars and car-related expenses.
The CFTC added that Yang made net transfers of approximately $200,000 to bank accounts in her name, at least $1.4 million to bank accounts in her husband’s name, and more than $1 million to joint bank accounts she shared with her husband.
The regulator seeks full restitution to defrauded pool participants, disgorgement of any ill-gotten gains, a civil monetary penalty, permanent registration and trading bans, and a permanent injunction against future violations of the Commodity Exchange Act. The SEC has also filed a civil complaint against Yang in connection with this scheme.
The financial watchdog calls customers and other individuals to report suspicious activities. Whistleblowers are eligible to receive between 10 and 30 percent of the monetary sanctions collected paid from the Customer Protection Fund financed through monetary sanctions paid to the CFTC by violators of the CEA.