UPDATE: Another Bizarre Turn In WCM777 Ponzi Probe

With a storyline that has included claims that $14,000 would turn into $500,000 in a year, a declaration of love to the Peruvians it had fleeced and additional claims that all would become clear when “4 blood moons” appeared in the sky in April, the WCM777 “cloud computing” MLM scam has served up a symphony of the bizarre. For now, at least, the storyline only is getting stranger.

Here’s the latest  . . .

Very early on in her investigation of the WCM777 MLM “program” and the financial activities of accused Ponzi schemer Ming Xu, court-appointed receiver Krista. L. Freitag discovered that a Xu/WCM777-linked entity known as ToPacific had transferred $1 million to an entity known as MaNa Fashion.

This transfer, according to court filings, occurred “on or around” Feb. 28. On March 28, the SEC announced pyramid- and Ponzi charges against Xu. Freitag was appointed receiver.

Shortly thereafter, according to court filings, Freitag tried unsuccessfully to contact and to serve a subpoena on MaNa operator Sue Wang, according to court files.

Freitag, however, was able to identify Wang’s accountant, who provided an email address for Wang.

The receiver’s counsel then “e-mailed Ms. Wang a copy of the subpoena and a demand for information,” according to court filings. On May 23, nearly two months after the SEC action and Freitag’s appointment as receiver, “Ms. Wang finally acknowledged the Receiver’s attempts to contact her.”

Wang “thereafter engaged counsel to respond to the subpoenas,” according to the receiver. “After further delays and demands for additional time, Ms. Wang produced limited documents on July 18, 2014.”

In court filings, Freitag now says MaNa’s Wang is Ming Xu’s sister and that Ming Xu did not disclose this during an interview with the receivership. In fact, according to Freitag, the receivership did not learn this until September 2014.

That’s not the only surprise.

Freitag now finds herself seeking court approval to liquidate apparel in bulk as a means of recovering funds for WCM777 participants affected by the scheme. That’s because Freitag, on Oct. 13, met with Wang and her counsel and visited “two 10′ x 20′ storage sheds” that included an estimated 100,000 garments.

Wang has acknowledged the apparel belongs to the receivership, Freitag says.

These garments mostly were “stored in disorganized fashion, with much of the articles of apparel stuffed in large plastic bags and boxes with limited recognizable form of organization either by style, size or other methods generally acceptable in the [fashion] industry.”

The items, Freitag says, are “non-branded” and will not fetch the $1 million Xu supplied his sister to acquire them. The best that can be hoped for is between $100,000 and $250,000, but their value will decrease over time because the merchandise is aging. “Most” of it was acquired for “previous seasons.”

It might be helpful to sell them in bulk ASAP with the holiday season quickly approaching, Freitag says.

So, she has asked the judge for permission to do exactly that. And, Freitag notes that she “has direct experience running a design and wholesale footwear and accessories company, and will utilize that expertise and experience to market the Garments and negotiate with potential buyers for the highest per unit price.”

It also turns out that Wang was associated with two other entities that received another $1 million combined from Xu. These were identified as JJ Sparkles Inc. and Yuanhao Inc.

“These entities are interrelated as their public registrations with the California Secretary of State show that Ms. Wang (who is also named as a salesperson for MaNa Fashion) is the named agent for service of process for both MaNa Fashion and JJ Sparkles, and Yuanhao’s registered business address is that of JJ Sparkles.”

“The Receiver is continuing her investigation into the remaining funds disbursed to the other entities and will pursue these matters as appropriate,” Freitag says in an Ex Parte Application for Order to Sell Additional Personal Property.

Because Ming Xu also bought golf courses, the receivership also has found itself in the golf business. And because Xu, the purported cloud-computing chieftain, used WCM777-linked funds to acquire real estate, the receivership also has found itself in the property-management business.

The receivership even became a part of the fish-management business when Freitag discovered “live Koi” at a WCM777-linked property in California.

Visit the receivership website.