By Edvard Pettersson and Jeran Wittenstein
Sept. 14 (Bloomberg) -- An autopsy on Danny Pang, the indicted founder of Private Equity Management Group Inc. who died on Sept. 12 while free on $1 million bail, showed no signs of foul play, the Orange County Coroner’s office said.
Pang, of Newport Beach, California, was 42. He was accused by the U.S. Securities and Exchange Commission of lying to Taiwanese investors about his credentials, forging insurance documents and paying existing investors with funds raised from new ones, while claiming the returns came from investments in life insurance policies.
The coroner’s office completed its autopsy on Pang on Sept. 13 and said in a statement posted online that there is no suspicion of foul play. The case is still being investigated pending toxicology results that should take about two to three months to complete. Mitchell Sigal, deputy at the coroner’s office, declined to provide additional details when reached by telephone.
“Pang’s death is a surprise but it won’t make any difference; investors won’t get their money back,” said Michael On, president of Beyond Asset Management Co. in Taipei. “People have to realize there’s no windfall from these investments.” On said he had no money invested with Pang.
Emergency Order
Pang pleaded not guilty on July 27 to charges in a separate criminal case that he structured cash withdrawals to avoid having to report them. He was charged in an indictment with two counts of making a total of about 50 cash withdrawals in amounts of as high as $9,900 to evade a U.S. law that requires reporting cash withdrawals of $10,000 or more.
The financier was arrested in the criminal case in April, shortly after the SEC obtained an emergency order freezing the assets of Irvine, California-based PEMGroup.
The company’s investors, including eight financial institutions and about 35 wealthy individuals, have $823 million invested with PEMGroup, according to a May 6 report by the receiver. The underlying assets may be worth $193 million to $360 million, the receiver said in an August status report.
Pang’s death will not add to losses at Taiwanese banks, the Economic Daily News said, citing banks including Hua Nan Commercial Bank Ltd. Taiwan banks have already realized Private Equity Management-related losses of NT$9.67 billion ($296 million), the paper said.
Taiwan Investors
“Pang’s death won’t affect our attempts to recover our investments as the assets of the group are now in receivership as appointed by the SEC, and the group of banks here in Taiwan are in constant communication with the receiver,” said York Lai, a spokesman for Hua Nan said, which sold about $200 million of PEMGroup related products. The bank made provisions of NT$850 million in the first-half for PEM-related losses, Lai said.
Taiwan’s financial regulator in May asked the island’s financial institutions to repurchase securities they sold from PEMGroup to investors, so Pang’s death won’t affect them, Chang Ming-daw, head of the banking bureau of the Financial Supervisory Commission said in Taipei today.
“PEMGroup is a legal entity and so Pang’s death isn’t likely to affect the process by the Taiwanese banks to recover their investments,” Chang said. The regulator hasn’t received notification from the SEC about Pang’s death, he said.
Standard Chartered Bank in Taiwan, one of the six financial institutions to have sold PEMGroup products, declined to comment on Pang’s death. The lender had made provisions of $170 million in the first half for PEMGroup-related investements, the lender said in an e-mailed reply to questions.
In the past, U.S. prosecutors have dismissed cases against defendants upon receipt of a death certificate, said Thomas Mrozek, a spokesman for the U.S. Attorney’s Office in Los Angeles.
The case is U.S. v. Pang, 09-00161, U.S. District Court, Central District of California (Santa Ana.)
To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net; Jeran Wittenstein at jwittenstei1@bloomberg.net
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