Recently, however, the mysterious death of private equity guru Danny Pang has moved the line of scrimmage for Ponzi scheme royalty, turning swimming naked into something that borders on the operatic.
On the surface, Pang appeared to be a perfect evocation of the American dream: young, handsome, and ambitious, the 42-year-old Taiwanese immigrant had checked all the boxes necessary for rapid advancement in his adopted country. With an MBA from the University of California, Irvine, he worked his way up to become partner of Sky Capital Partners, a venture capital firm, and later formed Private Equity Management Group (PEMGroup), an investment company specifically targeted toward Asian investors. Along the way, he managed to pick up a beautiful wife, former stripper Janie Louise.
Ultimately, however, it all unraveled. In 1997, Pang's wife hired a private investigator to tail him, and the detective observed him holding hands with an unnamed woman. Shortly afterward, Mrs. Pang was shot by an unknown assailant while her husband was away on business. His refusal to cooperate with the subsequent investigation, combined with his decision to plead the fifth at the trial, led many to question whether he was responsible for the death of his wife. Although he was never definitively connected to her slaying, the unsolved murder of Janie Louise Pang hung heavy over the head of her husband. He was later sued by his stepson for attempting to steal the young man's inheritance; the matter was settled out of court.
Even before Janie Louise Pang's death, the edges of her husband's legend were starting to look a little frayed. The police had been summoned to the Pang residence on four prior occasions and, in 1993, Mrs. Pang had informed the officers that her husband had stolen money from her parents and her, and had spent it on gambling, alcohol, and women. In 1997, the same year as her death, he was fired by Sky Capital Partners, where he was a managing partner, after his boss discovered that Pang had stolen $3 million of the firm's money.
Pang's subsequent business, PEMGroup, based its income-generation model on life insurance. Basically, the firm planned to buy life insurance policies from elderly people, paying them less than the face value of the policies. Later, when the elderly clients died, the company would accept the payout and make a significant profit. Unfortunately, however, the fund soon found that its insured clients weren't dying at the expected rate.
At the same time, PEMGroup was offering notes to various Asian investment firms, promising to pay above-market interest on the financial instruments. In turn, it claimed to have invested the money generated into corporate debt, time shares, and more life insurance policies. However, according to Nazare Aboubakare, former president of PEMGroup, the company's "investments" included a private jet, which Pang used for personal travel to, among other places, Las Vegas. In one infamous 2007 trip, the financier used the plane to ferry several of the company's female employees to Sin City; on the return flight, he allegedly showered them with stacks of bills.
Meanwhile, according to Aboubakare, Pang falsified company documents and confessed that he was running a Ponzi scheme. When confronted with these charges, PEMGroup sources stated that Aboubakare was involved in an inappropriate relationship with an employee and embezzled funds from the company, charges that Aboubakare admits are true. He was fired from the company in 2007, although he claims that Pang offered him $500,000 to recant his allegations.
Over the past five months, as Peng has been facing separate investigations from the SEC and the FBI for, respectively, defrauding investors and laundering money, more and more details about Pang about his sordid past have come to light. For example, while he apparently enrolled for one summer session at UC Irvine and was president of the school's Asian Students Association, there is no evidence that he received his BA from the school, let alone his MBA. Further, according to some investigators, there appears to be a possible connection between the businessman and Taiwanese criminal families.
On Friday afternoon, paramedics arrived at Pang's home in Newport Beach, California, where he was unconscious and not breathing. Although he was revived at Hoag Hospital, he died the following morning. Thus far, the Orange County Coroner's office has found no evidence of foul play, although toxicology tests could take up to three months to complete.
While Pang is, in many ways, worlds apart from Madoff, the two businessmen share an important trait: just as Madoff's guilty plea enabled him to avoid an extended trial that would have revealed many details of his business, Pang's death seems to have conveniently enabled him -- and his partners -- to avoid legal scrutiny. With a forthcoming burial and months before his autopsy is completed, it looks like the world may never learn the full extent of his schemes.