The Securities and Exchange Commission has charged two California men and two companies they control with an $80 million Ponzi scheme that targeted Korean-Americans with promises of unusually high returns from foreign currency (forex) trading.

According to the SEC complaint filed Tuesday in federal district court in San Francisco, Peter C. Son, of Danville, Calif., and Jin K. Chung, of Los Altos, Calif., perpetrated a scam involving roughly 500 investors in the United States, South Korea and Taiwan. Instead of investing funds in the forex market as claimed, the pair used the money to pay cash "returns" to certain investors in Ponzi-like fashion. They also misappropriated investor money for their own personal use, including mortgage payments on Son's multimillion dollar home. The SEC is seeking an emergency court order to freeze the defendants' assets.

The SEC's complaint says Son and Chung operated their scheme through SNC Asset Management Inc. (SNCA) and SNC Investments Inc. (SNCI), with offices in Pleasanton, Calif., and New York City. Son and Chung promised investors annual returns of up to 36% from forex trading, and made claims that SNCA had generated 50% profits annually from forex trading since 2003.

The SEC alleges that Son and Chung faked SNCA's supposed forex trading profits, providing investors with monthly account statements with phony returns. As the Ponzi scheme collapsed, Son and Chung siphoned SNCA's and SNCI's bank accounts and transferred investor funds to accounts they controlled overseas. In addition to paying Son's mortgage, investor funds were used to provide capital infusions to SNCI and to pay Son's wife a salary for which she did no work.

The SEC seeks court orders prohibiting the defendants from engaging in future violations of the antifraud provisions of the federal securities laws; freezing their assets and compelling them to return overseas assets to the U.S.; and requiring them to disgorge their ill-gotten gains and pay financial penalties.
In addition to the SEC's complaint, the Commodity Futures Trading Commission announced civil fraud charges against Son, Chung, SNCA and SNCI.