The Securities and Exchange Commission closed WCM777 in March, triggering a court-appointed Receivership to secure assets. The Receivership's Second Interim Report, recently released, reveals the recovery of approximately $15.67 million in cash and seven real estate properties, a direct effort to compensate investors harmed by the scheme.
The cash recovery includes $2.26 million from accounts specifically listed in the Temporary Restraining Order and an additional $13.41 million recovered through subsequent efforts. Beyond monetary assets, the Receiver has taken control of five commercial and residential properties, alongside two operating golf courses. An agreement with several third parties has also escrowed $2.92 million in cash, pending further court orders.
This brings the total secured assets to $18.59 million in cash and the seven properties. The value these properties will yield upon sale remains undetermined. The cash portion alone represents 29% of the estimated $65 million that the SEC claims WCM777 defrauded from investors.
A separate sum of $1.38 million in US dollars was held in a Hong Kong-based HSBC bank account. However, HSBC in Hong Kong has not cooperated with the Receiver's requests for information. Consequently, the Receiver does not know the account's current balance as of March 27, 2014. This lack of cooperation complicates the recovery process for international assets.
The Receivership's investigation also targets Zhi "Tiger" Liu, identified as Phil Ming Xu's partner in crime. Liu, the former CEO of WCM777 Ltd., allegedly fled before the SEC shutdown. Xu had previously claimed Liu stole $30 million in investor funds. Liu's current whereabouts remain unknown.
Prior to the Receiver's appointment, WCM777 itself filed a lawsuit against Liu. This complaint alleges Liu breached his fiduciary duty and defrauded WCM. It describes WCM's business as internet cloud services, operating with a membership referral model. Liu allegedly developed this model, where members activated cloud products by purchasing e-wallet points.
Members could earn more e-wallet points by referring others. These points were redeemable for prize rewards and cash incentives. The lawsuit claims a secondary market emerged where e-wallet points were sold for cash. Liu allegedly exploited this market to run his own fraudulent scheme.
Liu purportedly issued $20 million in e-wallet points, with one point valued at approximately $1. He then posted these points to "strawman" accounts before selling them on the secondary market. Liu reportedly kept all profits from these sales, without informing WCM or sharing the proceeds. The lawsuit against Zhi Liu continues to be a key element of the Receivership's ongoing efforts to recover funds.