SEC Brings Charges Against David Hu, Founder Of International Investment Group, LLCC, For Allegedly Orchestrating $60 Million Ponzi Scheme

On July 17, 2020, the Securities and Exchange Commission (SEC), brought fraud charges against David Hu, the co-founder and chief investment officer of International Investment Group (IIG), in Manhattan federal district court. A link to the charges can be found here.

The SEC is charging Hu with running multiple fraudulent schemes to misrepresent the performance and conceal losses in IIG’s Trade Opportunities Fund (TOF). In addition, Hu is alleged to have sold over $60 million in phony trade finance loans to investors, using the proceeds to pay back other customers who made redemption requests for earlier investments.

Senior associate director of the SEC’s New York Regional Office, Sanjay Wadhwa, commented on the charges, stating “[t]he SEC remains committed to holding accountable individual wrongdoers who seek to take advantage of investors for personal gain, including when they employ elaborate means to cover up their fraud.” Mr. Wadhwa added “. . . Hu’s deception caused substantial losses to a retail mutual fund, and other funds IIG advised.”

According to the SEC’s charges, Hu’s scheme was orchestrated “. . . to cover up tens of millions of dollars in losses on bad bets in order to keep his investment advisory business, the International Investment Group LLC (“IIG”), afloat.” Hu’s firm, IIG, “. . . was an investment advisor that specialized in trade finance lending – risky loans to small – and medium-sized companies in emerging markets.”

IIG had primarily specialized in trade finance lending, which the SEC said was risky loans for small and mid-size companies in emerging markets. However, in 2007, Hu and others at IIG began to hide the losses in the TOF’s portfolio by overvaluing bad loans and substituting defaulted loans with “. . . fake ‘performing’ loan assets.” Hu would then unload these overvalued/fake loans to new investors in order to pay back earlier investors. Further, Hu directed other employees at IIG to create these fake loans and other documents, including but not limited to promissory notes and a forged credit agreement.

Last year, in November 2019, IIG was charged with fraud by the SEC and subsequently revoked IIG’s registration as an investment adviser. On March 30, 2020, a final judgement was entered against IIG that enjoined IIG from violating the antifraud provisions of federal securities laws and ordered IIG to pay over $35 million.

Did You Lose Money Investing With IIG Or David Hu?

If you or someone you know invested money with IIG, there may be recovery available. At Silver Law Group, our nationally-recognized securities and investment fraud attorneys assist investors throughout the U.S. We are ready to help you investigate the details of your situation and determine a course of action that is tailored to your needs and goals. If you or someone you know invested with IIG, please contact the Silver Law Group toll free at (800)-975-4799 or e-mail ssilver@silverlaw.com for a confidential consultation.