Regal Financial Bank, a small bank in Seattle, was sued earlier this month by a group of 4,200 Indonesian investors over accusations that it helped operate a $600 million Ponzi scheme. A Ponzi scheme involves a fraudulent investment operation that pays returns to investors from their own money (or money paid by subsequent investors) rather than from any actual profit earned.
Founded in 2001, Regal Financial had a hand in promoting the scheme that embezzled using two investment funds operated through an Indonesian corporation, according to a complaint filed in federal court in Seattle last week.
According to a civil filing earlier this month in federal court, investors are looking to recover $175 million in losses.
In a complaint filed on April 17, U.S. lawyers for the association stated that the vast majority of Indonesian investors were made up of middle class citizens who could not afford to lose their life savings. The suit is a component of an international effort to recover some of the money lost by the investors.
According to the complaint, the Ponzi scheme was operated by the now-defunct Dressel Investment Ltd., based in the British Virgin Islands. Dressel began raising money in Indonesia in April 2001 through investment funds that promised annual returns of 24 percent. During that time, Danny Wong of North Carolina, Donald Sherer of Utah, and others allegedly began raising funds for Dressel Investments. According to the suit, Regal Financial Bank President and CEO Jesse Tam allegedly conspired with Dressel by providing letters of recommendation to help raise funds for the scheme.
From 2001 to 2007, Dressel raised more than $300 million in Indonesia from more than 10,000 investors. The majority of the funds were used to pay “outsized” returns to Dressel investors.
The complaint stated that approximately $30 million of the funds raised had been forwarded to Regal Financial in the U.S. and to Hong Kong. Regal allegedly then transferred or wired the funds to other Dressel accounts or to Wong’s personal bank accounts in China and the British Virgin Islands.
An Interpol arrest warrant has been issued for Wong, the complaint said. ♦
The Seattle Post-Intelligencer contributed to this report.