CFTC wins case against $15.7 million Forex scam who preyed on Hmong community
Kay Yang and her companies are being ordered to pay $13,692,690.27 in restitution to defrauded victims and a $10,387,635.91 civil monetary penalty. Kay Yang’s husband, relief defendant Chao Yang, is being ordered to pay $1,422,430.42 in disgorgement.
The Commodity Futures Trading Commission has entered an order of default judgment and permanent injunction against Kay Yang for fraud in connection with retail foreign currency transactions that targeted the local Hmong community.
Kay Yang, Founder and CEO of AK Equity and Xapphire, was found to have engaged in a fraudulent scheme through which she solicited and received at least $15.7 million from approximately 67 individuals or entities for participation in a commodity pool that purported to trade forex. The FX scam took place between April 2017 and March 2020.
Kay Yang and husband Chao Yang to pay up millions
Kay Yang was found to have 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 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.
Most pool participants were members of the Hmong community in Wisconsin, according to the CFTC, which added that FX fraud operation misappropriated at least $4.8 million of pool participants’ funds and spent that money on Yang’s personal expenses, including spending nearly $1.4 million at casinos and on luxury hotels and cars.
Kay Yang and her companies are being ordered to pay $13,692,690.27 in restitution to defrauded victims and a $10,387,635.91 civil monetary penalty. Kay Yang’s husband, relief defendant Chao Yang, is being ordered to pay $1,422,430.42 in disgorgement.
The order finds Yang and her companies are liable for fraud in connection with retail forex transactions, fraud by a commodity pool operator (CPO) and an associated person of a CPO, and registration violations. The order further finds relief defendant Chao Yang received $1.4 million, which was derived from the fraud. The order, entered on June 5, stems from a CFTC complaint filed on April 13, 2022.
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.
