SEC Charges China-Based QZ Asset Management and CEO in Multimillion-Dollar Fraud Scheme
The U.S. Securities and Exchange Commission announced charges for China-based investment adviser QZ Asset Management Limited a/k/a Qianze Asset Management Limited, its South Dakota-based holding company QZ Global Limited, and the chief executive officer of both entities, Blake Yeung Pu Lei a/k/a Yang Pulei. The group was charged with fraud for lying to clients and prospective clients regarding the safety of their investments, the investment adviser’s relationships with certain well-known banks and law firms, and the holding company’s initial public stock offering.
The SEC complaint alleges that QZ Asset, QZ Global, and Yeung defrauded at least 285 individuals out of at least $6 million from at least October 2022 through May 2023. According to the complaint, QZ Asset and Yeung, in his mid-30s, falsely claimed that QZ Asset – which touted itself as an investment manager for institutional and retail clients – would use its proprietary AI-based technology to help generate extraordinary weekly returns, 2.5% to 7%, while promising 100% protection for client funds and that well-known and reputable financial and legal firms were providing services to the company.
The QZ Asset solicitation were aimed at clients and prospective clients globally, including the United States, and were made using social media, particularly Facebook and WhatsApp, and video streaming platforms such as Zoom and YouTube.
QZ Asset marketed its advisory accounts as packages or contracts where purported guaranteed returns on investment were tied to the size of the investment, with larger investments being promised higher ROI. For example, with an Easter holiday promotion, QZ Asset offered a “2% daily ROI and a brand new iPhone” for those funding accounts with at least $10,000.
Clients opened accounts by signing up via QZ Asset’s website and the providing the company with crypto assets, often in the form of Tether. Once a client deposited money into their QZ Asset account, the company purported match the client’s deposit, doubling the investment. The boosted amounts were allegedly reflected in clients’ accounts.
The complaint also alleges that the defendants falsely claimed that QZ Global had applied to have its common stock listed on the Nasdaq Global Select Market, achieving 20x capital gains, and that they had myriad positive communications with SEC staff regarding this effort. In addition, QZ Global allegedly touted its SEC filings, which were materially deficient, to lure clients and prospective clients into handing over their funds to QZ Asset.
The company also allegedly encouraged clients to be entrepreneurial by recruiting more clients to open QZ Asset accounts, and promising bonuses for successful recruitment, i.e., money, trips, luxury cars, visas.
According to the complaint, after engaging in this global, multimillion-dollar fraud, the defendants allegedly stopped communicating with clients and QZ Asset’s website, which clients used to access their funds, was taken down.
“The defendants’ brazen fraud alleged in our complaint, including their abuse of the SEC’s filing process to prey on individuals in the United States and across the world, is reprehensible,” said Jason J. Burt, regional director of the SEC’s Denver office. “We will continue to hold accountable those who deceive investors, including by misusing the SEC’s name and processes to provide an air of legitimacy to their fraudulent endeavors.”
The SEC’s complaint charges the defendants with violating the antifraud provisions of the federal securities laws and seeks permanent injunctive relief, return of allegedly ill-gotten gains, and civil penalties.
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