Seng Tan conviction upheld

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Seng Tan conviction upheld

Post by Lambkin » Thu Mar 29, 2012 2:08 am

A recent ruling by the U.S. Court of Appeals, 1st Circuit, affirms Seng Tan's conviction for mail fraud and money laundering. This is related to the Oneuniverseonline (1UOL) and World Marketing Direct Selling (WMDS) MLM Ponzi scheme which targeted the Cambodian immigrant community. ... -2007-CURR
A federal jury convicted James Bunchan and Seng Tan, a husband and wife team, of numerous mail-fraud, money-laundering, and conspiracy crimes committed in furtherance of a classic pyramid scheme that swindled some 500 people out of roughly $20,000,000 in the early to mid-2000s. See 18 U.S.C. §§ 1341, 1957, 371. Fellow scammer Christian Rochon pled guilty to similar charges on the first day of trial, and his testimony in the prosecution's case helped seal the couple's fate. We affirmed Bunchan's convictions in United States v. Bunchan, 580 F.3d 66, 67 (1st Cir. 2009), and now affirm Tan's.
Bunchan founded and owned two self-styled multi-level marketing (MLM) companies — World Marketing Direct Selling (WMDS) and Oneuniverseonline (1UOL) — that supposedly made a mint selling health and dietary supplements. In a legit MLM venture — think Avon, Mary Kay, Amway (companies Tan had worked for) — each person who joins the sales force also becomes a recruiter who brings in other persons underneath her. But the venture survives by making money off of product sales, not off of new recruits. Not so with WMDS and 1UOL. Neither sold much of anything, and both raised gobs of money almost exclusively by recruiting new investors, also called members.
Here is how it all worked. Bunchan tasked Tan with drumming up new members, something she was born to do, apparently. Both she and Bunchan are Cambodian émigrés. And they focused their recruitment efforts primarily on Cambodians living here, many of whom were first-generation Cambodian-Americans who had limited educations and spoke little English. As "CEO Executive National Marketing Director," Tan ran informational seminars for potential investors, meeting them at hotels, their homes, and elsewhere. She usually made quite an entrance, showing up in a chauffeur-driven Mercedes. And she spoke to the attendees in their native language (Khmer), stressing their common background too (including their shared experiences living in Cambodia during the murderous reign of the Khmer Rouge).
Tan's pitch was quite attractive. She and Bunchan were millionaires, she said, and the "gods" had sent her to make "the Cambodian people" millionaires too. She bragged about how profitable both companies were thanks to high product sales, which earned members at the "Distributor" level fantastic sales commissions. But a member did not have to sell a single item to make money, she explained. For a lump-sum payment of $26,347.86, an investor could skip the Distributor level, become a "Director I," and get an immediate "bonus" of $2,797, plus $300 every month for the rest of her life, her children's lives, their children's lives, and so on. Promotional pamphlets also promised investors that if they recruited more members and kicked in more money (any where from $130,000-$160,000), they could become "Gold Directors" and earn even higher never-ending monthly payouts (something like $2,500 a month). And Tan urged persons short on cash to take out second mortgages or home-equity loans or to borrow money from their retirement accounts to finance their investments, and more than 150 people did. She even had members sign forms so that the loan proceeds would be wired directly to WMDS or 1UOL.