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O.C. money manager is arrested on suspicion of evading currency reporting laws

The FBI's arrest of Danny Pang, who allegedly sought to hide more than $300,000 in cash from the government, comes one day after he is accused of bilking investors of hundreds of millions of dollars.

April 29, 2009|Stuart Pfeifer

Orange County money manager Danny Pang, accused this week of defrauding investors out of hundreds of millions of dollars, was arrested Tuesday by FBI agents on suspicion of evading currency reporting laws.

According to an affidavit, the FBI focused on a series of check-cashing transactions at the East West Bank branch in El Monte. Pang's aim was to convert cash to gold bullion, which he tucked away in a safe concealed in a bedroom closet, the affidavit said.

Agents seized an undisclosed amount of gold during a search of Pang's Newport Beach home Tuesday, according to a law enforcement source who was not authorized to speak publicly.

Federal authorities consider Pang a flight risk, and the charge used to make the arrest Tuesday may not be the last action in the case. The arrest was part of a continuing investigation, said U.S. attorney's spokesman Thom Mrozek. He declined to say whether additional charges would be brought or other suspects named.

The Justice Department's criminal complaint alleges that Pang sought to hide more than $300,000 from the government by asking relatives and employees to cash a series of checks from accounts he controlled for amounts less than $10,000 to avoid filing transaction reports.

Most of the checks were cashed by his personal assistant, the affidavit said.

The 42-year-old Pang, who first made headlines more than a decade ago when his wife was shot to death in their upscale Villa Park home, was accused this week by the Securities and Exchange Commission of defrauding investors, most of them from Taiwan.

The affidavit portrayed Pang as security-obsessed, noting that he installed several video cameras at his house in the gated Dover Shores community and surrounded himself with brawny associates.

Pang was meeting with his attorney, Allan H. Stokke, in Santa Ana when agents arrived and placed him under arrest, said FBI spokeswoman Laura Eilmiller. Pang was taken to Santa Ana Jail, where he was expected to be held until a hearing today at the federal courthouse in Santa Ana, Eilmiller said.

Pang's lawyer said he had not had an opportunity to review the allegations and could not comment. He said Pang had recently returned to Orange County from China, knowing that an investigation was underway.

"He's not running away from it at all," Stokke said. "A person who is truly guilty might be tempted to stay in a foreign country where he might not be reachable."

He said he would ask a judge at a hearing set for today to order Pang's release from jail on a "signature bond," which requires no bail.

On Monday, at the request of the SEC, U.S. District Judge Philip S. Gutierrez froze Pang's assets and those of his Irvine company, Private Equity Management Group Inc., and asked that he surrender his passports, return any "ill-gotten gains" and any money that might have been sent overseas.

Gutierrez scheduled a May 11 hearing to consider whether to extend the emergency order. The SEC said in a complaint that Pang had used money from newer investors to make interest payments to earlier investors, a tactic often used in Ponzi schemes.

The SEC also alleged that Pang had misstated to investors that he had earned a bachelor's and a master's degree from UC Irvine when he had no such degrees. He also told investors that he had previously worked as a senior vice president and high-tech merger advisor with Morgan Stanley when he had no such experience, the suit alleged.

Earlier this month, Pang relinquished control of his company, which he said would conduct an internal review of management policies. The firm's chief financial officer, Wilbur Quon, also stepped down.

According to the affidavit made public Tuesday, one of Pang's former business associates told the FBI that Pang routinely cashed checks for just below $10,000, then used the cash to buy gold bullion, which he stored in the hidden safe.

Pang told the associate, Nassar Aboubakare, "that the gold bullion was there in the event that something bad happened," according to the affidavit filed by FBI Special Agent Thomas J. Reitz.

The affidavit alleges that Pang and his associates had cashed 38 checks for amounts ranging from $9,500 to $9,900 since June 2007 to avoid federal currency reporting laws. Among those who cashed checks for Pang were his father and Pang's executive assistant, Hsiu "Ricky" Yeng, the FBI said.

According to the affidavit, financial crime suspects routinely write checks between $9,000 and $9,900 to avoid currency reporting laws that require banks to report transactions of $10,000 or more.

In 1997, Pang's wife, a former stripper named Janie, was shot to death in the couple's home in Villa Park. Five years later, an Orange County jury deadlocked in the murder trial of a lawyer who was charged with the slaying. The man charged with the murder, Hugh "Randy" McDonald, was not retried.

McDonald's attorneys alleged at the trial that Pang had engaged in questionable business dealings and had ties to Taiwanese organized crime figures.

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