$145.4 million USFIA settlement reached, pending approval
On January 9th, the day before a scheduled trial to determine monetary relief, the SEC and Steve Chen attended a settlement conference.
A settlement was reached, pending formal approval by the Commission (SEC attorneys can’t accept a settlement agreement of their own accord).
Unfortunately Commission approval of the settlement is anticipated to take “approximately six weeks”.
A consent filing by the SEC on January 9th stipulates that whilst neither ‘admitting or denying any allegations‘ in the SEC’s complaint, Steve Chen will nonetheless consent to a judgement of $145.4 million.
Chen neither admitting or denying he was running a Ponzi schemes seems like a moot point. Last month summary judgement was ruled in favor of the SEC, based on the fact Chen ran USFIA as a Ponzi scheme.
Looking forward, the January 10th trial has been continued till March 14th, by which time the SEC will have approved or rejected the proposed settlement.
Personally I see them accepting it, as this is much cleaner way of recouping the millions Chen stole from victims.
It’s either this or go to trial for roughly the same amount, which makes little sense.
For Chen it’s a lose-lose situation. He either loses now and voluntarily returns victim’s money via settlement, or loses later at trial and is forced to return what he stole.
Pending approval of the proposed settlement, it will be interesting to see if the DOJ follow up with criminal charges. I have a feeling that investigation is ongoing.
I don’t know how to digest those figures ! At the first settlement meeting on Dec08, SEC asked for $55 M plus interest & 10 m for penalty; and that was before the summary judgement handed down.
and now they asked 145.4 m in total and the defendant accepted!
Can someone go through the Receiver’s latest report to see how much they took in and how they left?
Will the total value under the receiver’s control be part of this $145.4 m? Dose the defendant still have some money hiding somewhere in the U.S or around the would?
what if he will not able to pay, after being cleaned out by the Receiver? bankruptcy?
It would be very interesting to see these drama (tragety for the investors) unfolded !
Where’d you get that from?
The Receiver is still investigating, the last estimate in September was $180 million.
The SEC can’t claim back what Chen paid out, so they’re asking for $130 something million (about $9 million of which is interest). That must be what they’ve calculated Chen and USFIA had control over.
Possibly but we won’t know until the Receiver’s forensic accounting is finished.
Basically the SEC’s civil litigation will see Chen will be left penniless. If he’s stashed funds overseas and tries to pull a fast one he’ll likely be up for additional criminal charges on top of what the DOJ might charge him with for running USFIA.
Ultimately what the SEC get back from Chen will be dsitributed to USFIA victims. That’s on top of any clawback litigation the Receiver files to get back a percentage from insiders and net-winners.
Those 55m & 10m figures were mentioned in an Sec. letter to defendant on Dec14, filed on court’s record on Jan05.
Anyway, now when you read the receiver’s fifth report and do the math; he took in $195m, disbursed out $176m, left about $19m, roughly the same amount when the Receiver took over his accounts.
The receiver now is holding $26m in cash, plus real estate valued at about 77.5m; total assets of $104m. He has to figure out how to shore up that $41.4m difference ( $145.4-104 )!
Btw, there is a civic group lawsuit against him and others pending at a CA State Court by a group investers.
Of course, scammers like him know how to hide assets well in advance all over the world!
Guess we’ll have to wait for the SEC’s approval or denial of the settlement proposal for more info.
Won’t go anywhere, eventually it will be stayed as the Receivership is already going to distribute funds to victims.
I kind of feel disappointed that after 1 year of lawsuit, there is still no criminal prosecution against Chen.
Also Chen’s people around the world celebrate this ‘victory’ of Chen. They are bragging that SEC’s willing to accept settlement shows that the charges are lacking ground.
They even say the fine Chen is going to pay shows that ‘he took one for the team’. I wish there is a proper trial and sentence from the court.
These are the same people who accepted Chen was shitting amber riches out of his ass.
I wouldn’t take what they believe too seriously.
I see the USFIA receiver has submitted his latest report. They are starting to sell off Chen’s real estate and cars, however unless I am missing something it seems the receiver is no longer giving an estimated timetable for finishing the forensic accounting and starting the process of reimburseing investors.
Seems like this was a bigger mess than they thought at first.
It seems that the SEC settled with Chen for $51m of disgorgement, #3.79 m of interest and $16.728 m of civil penalty ( doc209 ).
my question is; is this a separate settlement from the $145.4 m settlement for his companies’ i.e. defendant entity; or this is the new settlement amount, $71.728 million for the whole case? could you elaborate on that?
Different defendant, different settlement amount.
Got USFIA on my update list for tomorrow, will have a closer look then.
Oz it seems that agreement filed the other day was erroneous, they have filed a new one with the corrected amounts showing $135.6 m disgorgement plus $9.81 m interest, but no civil penalties. So that makes about $145m as in the previous order.
The receiver says the Ponzi took in about $195m, he is holding about $104m in bank accts and real estate now being sold off, so seems like at a minimum investors will get half their money back, and more if they can claw back from the net winners and/or get hold of the money laundered by Chen’s brother in Dominican Republic.
Fred, what date was the new one filed for the corrected amount of $145 million ? Is is the one for the “defendant entity ” ? , and there is a separated one for Chen himself for the amount showing $71.728 million (this one including civil penalty of $16.728 million )doc.209 filed on mar10;
if so, that would add up to a total of $217 million against this whole Ponzi !
I think the Receiver has a lot more to do.
Missed getting around to the news yesterday. Will go through it later today.