A federal judge on Thursday granted the regulator's request for an
asset freeze over entities operating as WCM and WCM777, which are
based near Los Angeles and in Hong Kong and run by Ming Xu of Temple
WCM and WCM777 allegedly raised more than $65 million since March
2013 by promising people they could double their money in 100 days
by investing between $399 and $1,999 in cloud services such as
website hosting, data storage and software support.
According to the SEC, investors were told they could parlay "points"
they got for making investments or enrolling other investors into
stakes in initial public offerings of 300 high-tech companies that
the WCM entities were incubating.
The SEC said the defendants were also creating a "secondary market"
where about $890 million of points had been traded, and even sought
to allay concerns by writing on WCM777's website: "We are not a
Ponzi game company."
But instead, according to the SEC, Xu and the WCM entities would use
some new money to pay older investors, and spent other funds on two
California golf courses and other properties, and to play the stock
market. Xu is also known as Phil Ming Xu.
"They were operating a pyramid scheme that preyed on investors in
particular ethnic communities, leaving them with nothing left to
show for their investment," Michele Wein Layne, director of the
SEC's Los Angeles office, said in a statement.
[to top of second column]
Wellman & Warren, a Laguna Hills, California-based law firm
representing the defendants, had no immediate comment.
U.S. District Judge Christina Snyder in Los Angeles imposed the
asset freeze and ordered a temporary receiver over the defendants'
assets. The SEC is also seeking to recoup illegal gains and impose
The case is SEC v. World Capital Market Inc et al, U.S. District
Court, Central District of California, No. 14-02334.
(Reporting by Jonathan Stempel in New York;
editing by Bernard Orr)
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