ckb168-logoCheongwha “Heywood” Chang and Toni Tong Chen were top affiliates in the CKB168 pyramid scheme.

For those unfamiliar with the scam, CKB168

misrepresented (itself) as a legitimate and profitable MLM company that sells web-based children’s educational courses when, in fact, CKB ha(d) little or no retail consumer sales and no apparent source of revenue other than money received from new investors.

CKB168 primarily targeted the Asian-American community in California, with the company accused of stealing ‘tens of millions of dollars from investors in the United States, Canada, Taiwan, Hong Kong, and other countries in Asia.

In October 2013 the SEC shut down CKB168 via a lawsuit against 16 CKB168 executives and top affiliates.

Chang and Chen are both based out of the US and their settlement reflects alleged violations of the Securities Exchange Act.

The settlement also mentions the pair have plead guilty in concurrent criminal proceedings.

Defendants Chang and Chen consented to the entry of the settled judgments, which permanently enjoin each of them from violating the unregistered offering provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, the anti-fraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the unregistered broker-dealer provisions of Section 15(a) of the Exchange Act.

Chang and Chen also agreed to conduct-based injunctions that prohibit each of them from participating in an illegal pyramid scheme disguised as a multi-level marketing program.

In settling the SEC’s charges against them, Chen and Chang each acknowledged having entered into written agreements to plead guilty in a parallel criminal action in which they each admitted that CKB was an investment scheme.

The total amount Chen and Chang will surrender to the SEC is $2,101,949.81 plus civil penalties to be decided at a later date.

Chen has also

agreed to be permanently suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies.

Five corporate defendants in the lawsuit have already defaulted. Litigation against the remaining CKB168 defendants continues…

 

Update 26th January 2022 – Heidi Mao, another CKB168 defendant, has settled with the SEC.

Mao consented to the entry of the judgment, which permanently enjoins her from violating the (Securities and Exchange Act).

Mao also agreed to conduct-based injunctions that prohibit her from participating in an illegal pyramid scheme disguised as a multi-level marketing program. The final judgment orders Mao to pay disgorgement of $449,729 and a civil penalty of $335,000.

The SEC continues to litigate to obtain final judgments against the remaining non-settling defendants and the corporate defendants.

Considering this one started in 2013, we’re coming up on almost a decade of litigation. Impressive.