Fund manager steals $150,000 in investor funds to pay for freezing dead wife’s bodyBy Mason White 11:44 AM December 26, 2014
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By: Feng Qian
A man was arrested on charges of running a Ponzi scheme after being caught using investor funds to pay for freezing his dead wife’s body, U.S. government prosecutors said in a statement.
Preet Bharara, the United States Attorney for the Southern District of New York, announced that Whileon Chay was charged for his alleged management of several fraudulent commodities pools, generally operating under the name “4X Solutions” or similar names.
According to the police investigation, Chay solicited more than $5 million from investors in commodities pools that he promised to invest in foreign exchange trading.
He promised annual returns of 24 percent, claiming that there is no risk in this activity.
However, Chay lost more than $2 million in forex and other commodities trading, and misappropriated a significant portion of the remaining investor funds for his personal use, including to pay for luxury cars and for his deceased wife to be cryogenically frozen.
Chay fled the United States during the course of the investigation.
Manhattan U.S. Attorney Preet Bharara said: “As alleged, Whileon Chay deceived investors about the commodities pools he managed, claiming to be a successful trader when he in fact was losing millions of dollars and misappropriating investors’ money for his own use. Although he has fled the country, these charges against him will persist and so will our efforts to bring him back to face them.”
According to the indictment unsealed in Manhattan federal court and other court documents: Chay began operating the first of several unregistered commodities pools operating under the name “4X Solutions,” collectively referred to in the indictment as the “4X Entities,” and began to solicit investors.
Chay represented to investors, orally and through written materials, that he had “been successfully trading the 4x for 15 years.
During this period, Chay’s clients have never experienced a month that they did not make money.
Chay also created and sent monthly account statements to investors, which showed that the 4X Entities were producing steady returns.
4X Entities claimed to have more than $16.5 million in assets under management. Chay did not invest the money as promised, and the little money he did invest was lost.
Chay lost approximately $2.3 million in forex and other commodities and securities trading, even as he continued to represent to investors and potential investors that the 4X Entities were profitable and that he never experienced a losing month.
Materials distributed to investors also claimed that there is no risk in this activity.
Chay managed the fraud by disseminating fraudulent account statements that represented that investors were receiving consistent positive returns, and by using new investors’ funds to pay the returns to existing investors.
He also misappropriated a significant portion of the funds invested in the 4X Entities for his personal use, including to pay his personal expenses and to maintain a lavish lifestyle, which he flaunted to potential investors.
For example, Chay drove a different luxury car virtually every time he met with one particular investor.
Chay also misappropriated investor funds for other purposes, including more than $150,000 to pay for his deceased wife to be cryogenically frozen.
Chay departed from New York to Lima, Peru, and has not returned to the United States. Chay, 38, was charged with commodities fraud, wire fraud , and mail fraud.
The mail and wire fraud charge each carries a maximum term of 20 years in prison, and the commodities fraud charge carries a maximum term of 10 years in prison.
Separately, the United States Commodities Futures Trading Commission has sued Chay and 4X Solutions, Inc., in an action filed in United States District Court for the Southern District of New York.
Chay has not appeared in that case, and the Clerk of Court has issued a certificate of default against him.