The SEC alleges that Yin Nan Wang and Wendy Ko raised over $150 million from some 2,000 investors by selling promissory notes issued through Velocity Investment Group, which manages the Bio Profit Series of investment funds.

Each of the Bio Profit Series funds purports to be primarily in the business of making real estate-related loans in California. However, Wang and Ko used money received from newer investors to make the quarterly interest payments to earlier investors in a "Ponzi-like fashion," the SEC said. 

According to US authority, Wang has admitted that Velocity was using new investor money to pay earlier investors.

It alleges that Wang directed one of the Bio Profit Series funds to provide its outside accountant with inaccurate financial information overstating its mortgage loans receivable and mortgage income figures. The more than $9.8 million of mortgage loan income shown in those financial statements included accrued interest that Wang “knew that the fund would never actually receive,” the SEC said.

The SEC further alleges that Wang and Ko used transactions between the Bio Profit Series funds and another firm charged in the complaint – Rockwell Realty Management – to conceal the fraud. 

“These transactions appear to have had no purpose other than to obfuscate the amount of transfers among the various funds,” it said.

A court hearing has been scheduled for December 9 on the SEC’s motion for a preliminary injunction.