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SEC Charges Californian with $11.8 Million Ponzi Scheme

SEC Charges Californian with $11.8 Million Ponzi Scheme. Broker-dealer, brokerage, financial services, RIA, SEC, Securities and Exchange Commission

The Securities and Exchange Commission charged Richmond, California resident Tilila Walker Sumchai with raising approximately $11.8 million from more than 1,000 retail investors through a fraudulent securities offering targeting members of the Tongan American community across the United States.

According to the SEC’s complaint, from approximately January 2021 through October 2021, Sumchai convinced retail investors to acquire shares of an investment she created called “Tongi Tupe” by falsely claiming that she would use a secret algorithm to generate guaranteed high returns. The complaint alleges that Sumchai first targeted respected Tongan American leaders, who were paid substantial returns on their investments, which convinced many of the leaders to believe that Tongi Tupe was legitimate. Sumchai then organized meetings hosted by these leaders at which Sumchai promoted Tongi Tupe to other members of the Tongan American community.

As alleged, Sumchai promised exceedingly high returns, including a $146,000 return in 16 weeks on a $3,000 investment. In reality, the complaint alleges, Tongi Tupe did not generate any returns; instead, Sumchai operated a Ponzi scheme that relied on new investor money to pay earlier investors. Additionally, as alleged in the complaint, Sumchai misappropriated at least $207,000 of investors’ money for unauthorized and undisclosed purposes, including to pay for casino trips, travel, and shopping.

The SEC’s complaint charges Sumchai with violating SEC rules and seeks permanent injunctions, including a conduct-based injunction, disgorgement with prejudgment interest, a civil penalty, and an officer and director bar.

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