Sunday, May 16, 2021

New York-based investment advisory firm executive pleads guilty in $100 million Ponzi scheme

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The managing partner of a New York City investment advisory firm pleaded guilty Thursday for his role in defrauding clients and investors out of more than $100 million.

David Hu, 63, of West Orange, New Jersey, managing partner and the chief investment officer of the New York-based investment advisory firm International Investment Group (IIG), pleaded guilty to investment adviser fraud, securities fraud, and wire fraud offenses.

“Hu perpetrated the scheme by, among other fraudulent actions, creating fictitious investments and overvaluing investments used to generate funds to pay off earlier investors in a Ponzi-like manner. In connection with his plea agreement, Hu has also agreed to forfeit more than $129 million,” the government said.

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He did it over a 10-year period, prosecutors said.

“Hu mismarked millions of dollars of loan assets, falsified paperwork to create fake loans, sold overvalued and fake loans and used the proceeds from those sales to pay off earlier investors, and falsified paperwork to deceive auditors and avoid scrutiny. He now faces a serious term of imprisonment,” Manhattan U.S. Attorney Audrey Strauss said in a statement.

He’s set to be sentenced on June 17.

In July, the Securities and Exchange Commission charged Hu with fraud for his role in the Ponzi scheme. Last month, the SEC charged Charles Samel, a former consultant for IIG, for his role in the alleged fraud conducted by IIG to cover up tens of millions of dollars in investor losses on bad bets in order to keep its investment advisory business afloat.

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