TAIPEI: A man accused of bilking Taiwan investors out of millions of Taiwan dollars, Danny Pang, founder of Private Equity Management Group Inc, has been indicted in the US.

Pang is accused of making about 50 cash withdrawals in amounts just below the $10,000 threshold at which by law the transactions are required to be reported to US regulators. Prosecutors say there is evidence of fraud in the case.

In April, the US Securities and Exchange Commission obtained an emergency order freezing the assets of Irvine, California-based PEMGroup, saying Pang and his company defrauded Taiwanese investors.

The US Securities and Exchange Commission accuses Pang of lying to Taiwanese investors about his credentials, forging insurance documents and paying existing investors with funds raised from new ones, while claiming the returns came from investments in life insurance policies.

The investors, including eight financial institutions and about 35 wealthy individuals, had $823 million invested with PEMGroup, according to a May 6 report by the receiver. The underlying assets would be worth $213 million in a forced liquidation and $426 million in an orderly liquidation, the receiver said in May.

Standard Chartered Taiwan Bank Ltd and five Taiwan banks plan to buy back about $740 million of outstanding securities of PEMGroup that they sold, Taiwan's financial regulator said on May 8.

A federal judge this month appointed a permanent receiver for PEMGroup, saying the SEC had provided sufficient evidence of the alleged fraud.

"Mr Pang believes these charges are false and he looks forward to being vindicated at trial," said Charles Sipkins, a spokesman for Pang.

Pang has been free on $1 million bail. He will be arraigned on July 27 in Santa Ana, California, said Thom Mrozek, a spokesman for US Attorney Thomas O'Brien in Los Angeles.

Bloomberg News

(HK Edition 07/24/2009 page2)