CKB168 CASE: 2 Promoters Plead Guilty To Criminal Counts; 3 Others Face Trial

Two U.S.-based promoters of the noxious CKB168 cross-border pyramid scheme aimed at Chinese-Americans have pleaded guilty to wire-fraud, the office of U.S. Attorney Eileen M. Decker of the Central District of California said.

The SEC sued Cheong Wha “Heywood” Chang, 48, and his wife, Toni Chen, 47, in 2013. Federal prosecutors later charged them criminally, alleging they duped people into investing in a “Profit Reward Points” scam and then tried to obstruct the SEC investigation.

Both reside in Hacienda Heights, Calif.

“These defendants defrauded investors out of millions of dollars, and then they attempted to obstruct justice when the Securities and Exchange Commission filed a lawsuit,” Decker said. “The fraudulent conduct in this case has harmed many people, both in the United States and abroad.”

The FBI handled the criminal probe.

Various investment schemes with apparent footprints in Hong Kong have been pushed by online hucksters since the SEC moved against U.S. based Zeek Rewards in 2012. The agency said CKB and related entities purportedly sold children’s educational courses.

What the purported opportunity really sold was the “false promise of easy wealth,” the SEC said in 2014.

“Potential purchasers of CKB products must invest in CKB to get one of its courses,” the SEC said. “Defendants promise that those investors will earn exponential, risk-free returns. In addition to the course, each purchaser/investor receives “Profit Reward Points” (“Prpts”) with a purported value of $750.”

From Decker’s office (italics added):

Chang and Chen each admitted that made false statements to investors, including: CKB was a successful and profitable business; with each investment of $1,380, an investor would receive “Profit Reward Points” (PRPTs) that were worth $750 and could be exchanged for money; PRPTs would increase in value as a passive investment, even if investors did not actively recruit new investors to CKB or sell CKB courses; and PRPTs were analogous to, or could be converted into, pre-IPO or future shares of CKB that would increase greatly in value when CKB went public. These statements to investors were false.

Also facing criminal charges of conspiracy and wire fraud from the SEC case are Wen Chen “Wendy” Lee, Daliang “David” Guo and Chih Hsuan “Kiki” Lin. They are scheduled to go on trial before U.S. District Judge Dale S. Fischer in November, Decker’s office said.

Fischer has set a February 2017 sentencing date for Chang and Chen.

The SEC alleged that Guo was atop the pyramid.

In 2014, the CKB prosecution and other pyramid-scheme cases made the SEC’s highlight reel.