A former Rowland Heights resident was sentenced Monday to 21 months behind bars and ordered to pay a $10,000 fine for participating in a pyramid scheme targeting Chinese-Americans who were told they were investing in a company that produced internet-based children’s educational courses.
Wen Chen “Wendy” Lee, 57, previously pleaded guilty in Los Angeles federal court to wire fraud, according to the U.S. Attorney’s Office.
Lee and other members of the conspiracy — which generated about $30 million — made false promises about the company, including claims that it generated substantial revenues from the sale of courses, that investments could be quickly liquidated for significant returns, and that they planned to take the company public through an IPO, federal prosecutors said.
In fact, according to court papers, “the only way for investors to earn any meaningful returns was for them to actively recruit new investors.”
The defendants promoted the company through YouTube videos and other postings on the Internet, as well as through meetings with prospective investors and live presentations about the purported investment opportunity. Members of the scheme solicited investments primarily from members of the Chinese-American communities in Los Angeles, San Francisco and New York City.
Daliang “David” Guo, 56, of Hyde Park, New York was convicted last year in downtown Los Angeles of conspiracy and nine counts of wire fraud for his role in the scheme. He is set to be sentenced June 24.
Cheong Wha “Heywood” Chang, 51, formerly of Hacienda Heights, and his wife, Toni Chen, 49, previously pleaded guilty to wire fraud and are scheduled to be sentenced June 17.