A Suspicious Activity Report (SAR) filed by HSBC reveals that, even after WCM777 was shut down by US authorities, the bank approved tens of millions in transfers.
WCM777 was a Ponzi scheme run my Phil Ming Xu, who at the time was residing in California.
After confirming their business model was illegal, WCM777 rebranded as Kingdom777 in January 2014.
The SEC shut down WCM777 three months later in March.
Xu settled with the SEC in September 2014.
The settlement saw Xu stripped of funds obtained through WCM777. An injunction also barred him from committing further acts of fraud.
Xu’s partner, Zhi Tiger Liu, who is believed to have run off to China with $20 to $30 million, was never apprehended.
As per the FinCEN Files leak, between 2013 and 2014 three WCM777 related SARs were filed.
The transactions reported amounted to $30.6 million dollars.
HSBC was the reporting bank. Yet despite filing three SARs and the SEC shutting WCM777 down in January 2014, HSBC kept WCM777’s accounts open until April 2014.
Investor funds were laundered through HSBC’s Hong Kong accounts. By the time HSBC shut them down, they had been all but cleared out.
After settling with the SEC Xu fled to China.
He relaunched WCM777 as World Capital Market and resumed scamming Chinese investors.
In 2016 Chinese authorities arrested Xu on financial fraud charges.
Despite admitting fraud in his settlement with the SEC and subsequent arrest in China, Xu maintains his innocence.
When he was contacted by ICIJ for comment on the FinCEN Files leak, Xu (right) stated;
I was misled by my lawyer to settle, which is against my heart.
My hear [sic] is pure for Kingdom. My vision is compromised.
First, WCM777 was selling good cloud products, not securities; through MLM structure.
SEC did the wrong thing to charge us and created big damages to me and my company. I request the SEC to compensate me for my loss.
Second, I sold WCM777 for $1 … I have given the sales contract to the SEC.
Third, I believed my personal rights are infringed by SEC and SEC plundered me without righteous procedures.
Safe from US authorities’ reach in China, it’s easy for Xu to attempt to rewrite history.
BehindMLM reviewed WCM777 and concluded it was a Ponzi scheme in June 2013.
Our research was confirmed by forensic analysis by the court-appointed WCM777 Receiver two years later.
The FinCEN Files are a series of leaked SARs initially provided to BuzzFeed.
BuzzFeed shared the leak with ICIJ and other organizations, who together processed the leaked information for publication.
Unfortunately a decision has been made not to share the full reports. As such we have to rely on redacted reporting for now.