In April 2022, Hu was sentenced to 12 years in prison for running a Ponzi scheme, defrauding and scamming customers of more than $120 million.
[2][3][5][6] David Hu's case was handled by the Securities and Commodities Task Force and the United States Department of Justice (DOJ).
[11] While at Nomura and Smith-Barney, Hu worked as a trader and managing director specializing in fixed income, emerging markets, and underwriting.
[15] The company primarily focuses on facilitating the financing of trade transactions involving commodities that can be hedged and liquidated easily.
The company uses a structure it developed called “transactional equity,” in which the firm helps fund the down payment required from a merchant seeking financing from a bank.
[18] In 1994, David Hu and Martin Silver cofounded IIG Capital, an RIA firm based in Manhattan, and registered their company with the SEC.
[6][3] Specifically, they provided loans for Central and South American small and medium-sized enterprises using food products like fish and coffee as collateral.
[3] For more than a decade from 2007 to 2019,[6][13] David Hu defrauded customers, stealing over $100 million in investor's money at IIG.
David Hu and Martin deceived their customers by falsifying documents and lying saying fake and defaulted loans were doing well.
Hu then used the proceeds from these fraudulent transactions to repay earlier investors, thereby running a Ponzi scheme for a decade.
[20][19][21][22] The SEC accused Hu of organizing multiple frauds since October 2013, overvaluing assets, charging inflated fees, selling $60 million in fake loans, using the proceeds to pay earlier investors, hoodwinking clients by providing fake documentation for non-existent loans, forging credit, and fabricating promissory notes.
[20] The SEC investigation of Hu was spearheaded by Philip A. Fortino, Lindsay Moilanen, Diego Brucculeri, Eli Bass and was supervised by Sheldon L. Pollock and Osman Nawaz.
[13] In April 2022, U.S. District Manhattan Judge Alvin Hellerstein[7] sentenced David Hu to 12 years in prison.
[6] Damian Williams accused Hu of falsifying documents, lying to auditors, selling fake loans, and losing millions of dollars of client's money.
[3] Manhattan Attorney Audrey Strauss accused Hu of failing to fulfill his fiduciary responsibilities, creating fake loans, and using the gains from those to pay earlier customers.
In a parallel proceeding, Hu was found guilty and ordered to forfeit these assets and pay restitution.