Danny Pang's Last Gamble

A dead stripper wife. A gambling habit. A made-up résumé. All Southern California financier Danny Pang needed to complete the picture was an SEC investigation of an alleged Ponzi scheme. Now he has that, too.

The SEC is charging Pang, a colorful Taiwanese immigrant who led a glittering L.A. lifestyle, with defrauding investors by falsifying his credentials and misrepresenting how his $4 billion money-management firm, PEMGroup, made money. A judge has frozen the firm's assets.

If even some of those accusations prove true, the picture that will inevitably emerge is that of a gambler and a liar — one who bets his inventions will never catch up with him.

Pang has been under the microscope since the Wall Street Journal aired charges similar to the ones the SEC is now making two weeks ago: that he'd never earned an MBA and never worked at Morgan Stanley. An ex-employee, Nasar Aboubakare, told the newspaper that Pang had called his money-management business, PEMGroup, a "Ponzi scheme" and offered him $500,000 on the condition that he not talk to the Journal. According to Aboubakare, a scheme to purchase life-insurance policies at a discount and pay investors with the proceeds went sour, and Pang instead paid his investors their promised returns with new money raised to invest in time shares.

Pang has denied the charges. But it's telling who he's hired as his spokesman: Mike Sitrick, the crisis PR guy whom Paris Hilton has on speed-dial.

New York has a complete timeline of Pang's career. He's had his share of financial shenanigans before the current ones. But three anecdotes seem to tell the story of his life:

Education. School records show Pang only attended one summer term at the University of California at Irvine, in 1986. Yet in the 1988-1989 term, he got elected chairman of the university's Asian Pacific Student & Staff Association. A university spokeswoman explained that anyone could have walked up and won the post.

Danny Pang's Last GambleS

Love. One would think a former stripper would marry for her husband's money, rather than the other way around. But Janie Louise Pang, Danny Pang's murdered wife, told police that her husband had been abusive and forced her to withdraw $70,000 from the bank to spend on gambling. The Journal reported on the mysterious circumstances of her death:

In May 1997, Ms. Pang hired an investigative agency, which, according to court records, observed her husband holding hands with another woman. The next day, Ms. Pang was scheduled to meet with the investigator at noon. Shortly before that, the doorbell rang at the Pangs' home. According to court records, the family's maid heard Ms. Pang, her 5-year-old at her side, answer the door and begin talking to the visitor, who asked if she was "Miss Pang."

She then began screaming. The maid saw her run through the house, chased by an elegantly dressed man carrying a briefcase and holding a gun. As Ms. Pang cowered in a closet, he shot her dead.

Danny Pang's Last GambleS

Money. Among the allegations against Pang is the claim that he used investors' money, raised to purchase time-share real estate, to buy a private jet in 2007. He then took PEMGroup employees on the jet to Las Vegas, where he won a large amount of cash and handed out stacks of bills to his workers.

Before the WSJ and the SEC closed in on him, Pang seemed to have been pursuing one last big bet: that an investment in a Chinese mining firm would pay off and allow him to make good on his soured life-insurance scheme. With commodity prices collapsed, that seems like a long shot. But up until a few weeks ago, Pang had been betting that no one would call to check on whether he'd actually gotten an MBA; that no one would make inquiries about his dead wife; that no one would ask how he managed to buy a private jet and support a gambling habit. For Danny Pang, all bets are off now.