I-Team

Multi-million dollar lawsuit filed in fraud case

Thursday, September 01, 2011
, Chief Investigative Reporter
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A major class action lawsuit has been filed in what could turn out to be the largest securities fraud in state history. It's a story the ABC7 I-Team first broke last week: Thousands of investors are out more than $700 million.

ABC7 reported last week that the FBI and SEC are investigating, and this class action lawsuit was filed late yesterday in Alameda Superior Court. The lawsuit is being carried out by a law firm out of Phoenix.

Yoko Oshima is named as a plaintiff in the class action lawsuit. She says Walter Ng personally guaranteed that he would protect the investment she made with his real estate funds so she could care for her 24-year-old autistic daughter, Lisa.

"I told him, this is not just my life, this is my daughter for future life, and he said, don't worry about it," Oshima said.

But with NG's companies in default, the lawsuit says about 2,800 investors are out more than $700 million. Oshima is frantic now that $450,000 she invested for her daughter's special needs trust is gone.

"There's a lack of morality," Oshima said. "Even the business, people still have to have morality. That's my word."

The lawsuit names the Ng Family companies that operate out of the Lafayette office: Bar-K Inc., RE Loans -- the fund that made real estate development loans -- and B-4 Partners, who managed the fund.

The complaint said Walter NG, his sons Barney and Kelly and Bruce Horowits "raised funds through the illegal sale of unregistered securities" and "with the knowing assistance of Defendants Wells Fargo and (law firm) Greenberg Traurig, engaged in a scheme to breach their fiduciary duties to the investors in order to prop up RE Loans and personally enrich themselves and their friends and business associates."

"It is a very sad case," said class action attorney Greg Fairbourn. "A lot of people have been taken advantage of by the conduct we described in the complaint."

The class action filed by Fairbourn also names Wells Fargo. Through its Capital Finance unit, it provided a $50 million line of credit that was supposed to help keep RE Loans afloat.

Fairbourn said the allegation they've made is that money was disbursed to preferred investors -- friends and family members.

"That's the allegation that we've made based on the investigation that we've done, and we believe that to be accurate," Fairbourn said.

Wells Fargo emailed a statement that reads, "The lawsuit against Wells Fargo Capital Finance is without merit, and we will defend ourselves against the allegations. Beyond that, we cannot provide any further comment at this time."

There was also no comment from several major players in this story. Kelly Ng had no comment when ABC7 stopped by a recent Cal Men's Volleyball Team, and last week, Walter Ng declined to speak with ABC7 when we caught up with him after a hearing in his bankruptcy case.

Barney Ng tried to deflect the blame to his father, brother and Bruce Horowitz when reached by phone Thursday afternoon, saying "I didn't make decisions, and didn't have the authority to make decisions, on how the investors' money was handled."

Barney Ng was the one who went out to find projects in which to invest.

There was also no comment from law firm Greenberg Traurig.

Cal told ABC7 on Thursday that Kelly Ng's contract has not been renewed with the school and he is no longer a coach there. Cal officials called this case a "distraction for the students."

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Tags:
fraud, crime, lawsuit, i-team, dan noyes
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