A former Mequon investment advisor facing federal fraud charges has been ordered to repay $4.06 million she obtained by making false and misleading statements to approximately 70 investors. Kay Yang has also been ordered to pay a $4.06 million civil penalty, bringing her total financial penalties to over $8 million.
Yang and her entities Xapphire LLC and AK Equity Group were originally charged with violations of federal securities laws last year.
According to the SEC’s complaint, between April 2017 and April 2021, Yang and Xapphire LLC engaged in the unregistered offer and sale of securities issued by AK Equity Group LLC and Xapphire Fund LLC. She raised approximately $16.5 million from 70 investors.
The complaint states Yang is a former tax preparer but has never been a CPA and has never been licensed by a securities regulator.
Yang’s investors were residents of at least eight states and a majority of them were members of the Hmong-American communities in Wisconsin and Minnesota.
Yang and her husband used over $4 million of investor money to pay for personal expenses which included gambling and cash withdrawals at casinos, real estate, extensive travel, luxury automobiles, and the repayment of certain investors from a previous venture.
In addition to repayment of money, Yang must also pay $188,787 in interest and is barred from acting as an officer or director of a public company.
Her husband, Chao Yang, had been ordered to repay $830,502 for his role in the couple’s scheme, as well as $38,615 in interest.
The U.S. District Court for the Eastern District of Wisconsin granted the SEC's motion for default judgment and entered final judgements against Kay Yang, Xapphire and Chao Yang.