New York Man Sentenced to 12 Years in Federal Prison for Multi-Million Dollar Pyramid Scheme that Targeted Chinese Americans
LOS ANGELES – A New York man has been sentenced to 144 months in federal prison for being a high-level promoter of a fraudulent company that solicited more than $200 million for a business that purported to market online children’s educational courses, but was in fact nothing more than a pyramid scheme.
Daliang “David” Guo, 56, of Hyde Park, New York, was sentenced at a Monday hearing by United States District Judge Dale S. Fischer.
After a seven-day trial in September 2018, Guo was found guilty by a federal jury of conspiracy to commit wire fraud, and nine counts of wire fraud for participating in the scheme that solicited investments primarily from members of Chinese-American communities in Los Angeles, San Francisco and New York City.
Guo and his co-conspirators made false representations about the Hong Kong-based company – known as CKB 168, but also sometimes known as CKBMax and Cyber Kids Best Education Limited. The false representations included claims that it generated substantial revenues from the sale of web-based children’s educational courses, that investments could be quickly liquidated for significant returns, that investors would get pre-initial public offering shares of CKB, and that the company would go public through an IPO. In reality, the only way for investors to earn any meaningful returns was for them to actively recruit new investors.
Guo and his co-conspirators promoted CKB through YouTube videos and other postings on the internet, as well as through meetings with prospective investors and live presentations about the purported investment opportunity.
Between mid-2011 and January 2014, Guo and his co-conspirators solicited investments in increments of $1,380, which gave investors “Profit Reward Points” they claimed were worth $750 in cash, would only increase in value, and could be converted to pre-IPO shares of CKB. Guo and his co-conspirators collected money from new investors and simply pocketed the cash to pay themselves the “commission” they earned from CKB, and lulled investors by providing them with essentially worthless Profit Reward Points.
Guo and his group of promoters collected approximately $142 million out of the more than $200 million raised by CKB from investors.
Guo’s four other co-defendants in this case have pleaded guilty to federal criminal charges and been sentenced to federal prison:
- Wen Chen “Wendy” Lee, 57, formerly of Rowland Heights, was sentenced to 21 months in federal prison;
- Chih Hsuan “Kiki” Lin, 54, formerly of Los Angeles and Las Vegas, was sentenced to 37 months in federal prison; and
- Cheong Wha “Heywood” Chang, 48, and his wife, Toni Tong Chen, 47, both formerly of Hacienda Heights, were sentenced to 12 months and one day, and 20 months in federal prison, respectively.
This case was investigated by the Federal Bureau of Investigation. The Securities and Exchange Commission provided valuable assistance.
This matter is being prosecuted by Assistant United States Attorney Ashwin Janakiram of the Major Frauds Section.