Alleged pyramid scheme offered kinship, a dream
LOWELL --She arrived at their homes in the back of a black Mercedes S500, her hair swept into a neat chignon, her fingers sparkling with diamonds.
They had never seen a Cambodian woman like Seng Tan before.
She was an immigrant, just as they were. She had fled the horrors of the Khmer Rouge, as they had. Her life in America was once as hard as theirs, she said.
She knelt in their temple, offering incense and promises. Don't tell anyone, she warned them. People grow jealous. We have suffered long enough. Now it is our people's time to be rich.
The immigrant families scraped together money from relatives and equity loans on their homes, and signed it over.
Right away, the investments brought returns. Checks came every month, just as Tan had promised. They bought giant televisions, quit jobs, drove Mercedes of their own.
And then, after five years, the payments stopped, and everything collapsed.
Last month, federal prosecutors accused Tan and two associates of operating a pyramid scheme and brought 11 counts of mail fraud against each of them. The Securities and Exchange Commission has filed a civil suit to recover the money they allegedly took.
At its peak, prosecutors say, the operation Tan and the others built roped in more than $30 million and 400 Cambodians, from Long Beach, Calif., to Lowell. And alleged victims are still coming forward.
But what was more striking than the size of the operation, federal investigators said, is the way Tan and her associates drew their fellow immigrants in, using their intimate familiarity with Cambodian culture and their deep understanding of the still-sharp pain left by their country's troubled past.
Cambodians fled their country by the thousands in the late 1970s, escaping the brutal regime of dictator Pol Pot and the Khmer Rouge, who massacred millions and imprisoned, tortured, and starved many others. Some of those who left made their way to industrial Lowell starting in 1981, drawn to factory jobs and inexpensive homes. Thousands more followed them.
The Cambodian community in Lowell -- now at an estimated 35,000 -- is one of the nation's largest, home to mostly blue-collar workers whose many family responsibilities in the city and in Cambodia keep them in modest circumstances. Many leaped at a chance for more when Tan came to town.
''My people, everybody suffer under the Khmer," said Tai Kim, 35, a print worker who gave Tan $131,000, raised from loans on his Lowell house. ''We have no education. We wanted our dream, to live in America . . . The way she said it, God sent her down here to help our Cambodian community. Now my life is the same way it was. Empty hands."
They had worked factory jobs since their arrival, saving enough for a down payment on their first house in Lowell in 1987 and trading up seven years later to one in Dracut, for which they paid $125,000. In 2000, they paid $24,000 cash for their first new car, a
They were doing alright, Heng Chea said. Still, when an old coworker from the factory arrived at his house in a sand-colored Mercedes one night in October, Heng Chea was intrigued by his talk of the woman named Seng Tan and the lucrative business opportunity she offered.
''Nobody wants to be poor, and especially my wife; she works so hard," Heng Chea said.
At 8 the next morning, his friend returned, with Seng Tan.
''Oooh, she dressed like a princess, a millionaire!" Heng Chea said.
''She wears a suit, professional, especially her hair," Anny Chea said. ''I never see a Cambodian lady look like that."
They all sat down at the Cheas' dining table, and Seng Tan explained the investment.
She told them they would need to pay $26,347.86 into a company called Worldwide Marketing Direct Selling, Inc., a vitamin and beauty-aid supplier. For that investment, the company would send them a $2,497 bonus, then $300 a month for life, and for their two children's lives. As a director in the company, they would get a car allowance, too. The more they invested, the higher their monthly payments would be. And for every five investors they recruited, the payments would jump again.
''Is this a scam?" Heng Chea said he asked. ''I have a good reputation. I go to temple."
Seng Tan told him no, that the company she and her boss, fellow-Cambodian James Bunchan, ran was like Amway, or Mary Kay, and that Chea was getting in on the ground floor. She said she had started out just like him, fleeing the Khmer Rouge, which she had fought in the Cambodian Navy. She settled in Minnesota and started a chain of florists, and she sold 15 of them to join World Marketing, she said. Soon the Cheas would be as rich as she was, she told him.
''Someone can listen to her and believe 90 percent right away," Heng Chea said. ''She is very attractive. It's amazing."
She seemed to focus on the Cheas, and other longstanding members of the community, sensing that once they bought in, other Cambodians would follow.
The Cheas refinanced their home and invested. And within a week, Heng Chea had recruited five relatives to invest, too. That qualified him for an $11,000 bonus, monthly payments of $1,000, and his own leased Mercedes.
Eventually, after Anny Chea recruited investors for the company, too, the couple received payments of $5,500 a month. Anny Chea cashed out her retirement plan without telling her husband and gave that to Seng Tan, too.
It was easy to keep recruiting people in Lowell, Heng Chea said. People respected him because he had been in the city so long, and they noticed his new lifestyle.
Hearing that the Cheas had invested persuaded Tai Kim, the print shop worker, to find out more. Even though he worked a lot of overtime as a laminator at a South Boston company, the costs of raising his two children left Kim with little money to help his father, four sisters, three brothers, and their families back home. He had run up credit card debt trying to bridge the gap.
Kim had some questions for Seng Tan when he heard the pitch. Why were only Cambodians investing, he asked her.
''She said we have to help all the Cambodian people first, before we go to another culture," he said.
Kim had no cash to invest, so Seng Tan urged him to refinance his Lowell house, which he had bought for $46,000 in 1996. Though there were many banks in Lowell, she urged him to apply at a bank in Connecticut. To his amazement, his $145,000 loan was approved within a week, with no house appraisal.
''It was so easy," Kim said. ''I feel confused, but I needed money, so I just keep quiet and take it."
The $2500 payments started coming right away. Kim bought a big-screen TV for his living room and an ornately carved dining table with gray marble inlays. He cut down on his shifts at the printing company.
At that point, in 2003, the number of World Marketing Direct investors was growing dramatically, as Seng Tan traveled across the country, to Minnesota, Georgia, and California recruiting other Cambodians for the alleged scheme.
Still, Seng Tan, who lived in Attleboro, was often in Lowell. She spent time at the Glory Buddhist Temple on Cambridge Street, telling other Cambodians she was a pious Buddhist who believed in right and wrong. Heng Chea said she told investors that if she was dishonest, Buddha should cause her to be struck by a car and die.
Investors were invited to regular motivational meetings at one of the company's warehouses in Norwood. There, James Bunchan gave emotional speeches, they recalled: One time he cried for joy at seeing his fellow Cambodians doing so well. He told investors that their prosperity would eventually spread to their homeland.
''We have not seen anybody [want] to help Cambodians like that, who see we suffered during Pol Pot," said Iv Khun Ya, a former police dispatcher from Cranston, R.I., who invested hundreds of thousands in the company.
Over lunches of egg rolls and fried rice, 100 or so investors reveled in their new prosperity, talking with one another about the things they had bought for their houses and the vacations they would take.
''I felt happy at the meetings," Kim said. ''Seng Tan came over, she said, 'Enjoy your life, nice car, be happy, go party.' "
As the checks continued to come in, even the most skeptical investors' trepidation drained away. By last summer, the early big investors -- those who poured in several hundred thousands of dollars and recruited others -- had received more than $100,000 in monthly payments.
''Everything Seng Tan promised, she did it," Heng Chea said. ''You get paid. Like the water flows."
The investors' savings were poured into extravagant purchases and Las Vegas gambling binges. Bunchan had a $2 million mansion, a boat, and several Mercedes Benzes in North Miami Beach. Prosecutors say he sent hundreds of thousands of dollars to his former wife, Chandy Yim, who lived with his two children in Miami. Receipts from Bunchan's trips to Las Vegas and elsewhere, all dutifully recorded as business expenses and paid for out of the company bank account, document an orgy of excess.
Lawyers say Bunchan spent at least $2 million gambling at Las Vegas casinos between 2003 and 2005, wagering as much as $200,000 on single days at the Mandalay Bay and Bellagio casinos. They say it is not clear whether Seng Tan was with him on those trips.
At the Atlantis resort in the Bahamas, Bunchan and a guest enjoyed a meal that came to $5,114.50 and included caviar, and two $1,600 ''Crystal Rose seafood platters." A gratuity of $562.50 was included on the tab, but Bunchan added another $800 to that.
A $38,000 diamond ring and two $1,700 tickets to a boxing match were also charged to the company. When an outside accountant raised doubts about the purchases, Rochon wrote him letters saying they were ''ordinary and necessary" costs of doing business.
Meanwhile, Seng Tan had persuaded some of their investors to buy into another Massachusetts company she and Bunchan had created, called One Universe Online Inc., a purveyor of cosmetics, jewelry, furniture, and other goods. Some of them, including Anny Chea, paid $120,000 to open up stores that sold the items and were given incentives to urge others to open stores, too.
The Cheas say they sold little at the store but had to keep ordering cosmetics and vitamins from the company, because Tan threatened to stop their monthly payments altogether if they didn't.
''Even if we know it's bad, we have to say it's good," Anny Chea said. ''Or she will stop the payments."
By May of 2005, the Cheas had been getting their checks on time every month for almost five years. But then they started coming late. And in July, they stopped altogether. Other investors stopped getting payments around the same time. Panicked, they flooded Tan with calls.
''I told her, listen, a lot of people are hurt because of you," said Ya. ''During Pol Pot they killed us by terminating your life. Don't kill them again financially."
Seng Tan assured Ya and the others the checks would come. At first, she said the company's computers could barely handle the huge number of investors. Then she said overseas companies were slow getting the checks out. Then, in September, she said Hurricane Katrina had hung up the payments. She tried to tamp down unrest among investors, who had begun talking to one another, with threatening letters from a lawyer.
Seng Tan, knowing the immigrant investors were wary of those outside their tight-knit community, had long succeeded in keeping word of the operation from reaching beyond Cambodian circles.
After the collapse, the investors were reluctant at first to go to authorities. But one day last fall, Ya, the former police dispatcher, told a former co-worker from the department what had happened. The officer sent him to the FBI, and several other investors went with him.
Within a couple of weeks, Bunchan was arrested in Miami, and Tan turned herself in Boston. Both were denied bail. Rochon was also arrested, and like Bunchan and Tan, faces 11 counts of mail fraud, each count carrying a maximum of 20 years in prison.
The lawyers for each of the three defendants say their clients are not guilty and were unaware investors were being defrauded. They declined to make them available for interviews.
Most of the money invested with Tan and the others is gone, the authorities say.
The alleged pyramid scheme and the huge losses took even leaders of Lowell's Cambodian community by surprise. They learned about it only after it collapsed.
''The Cambodian community is very close-knit and very private," said Vong Ros, director of the Cambodian Mutual Assistance Association, in Lowell. Tan ''knows the Cambodian population don't trust anybody but their family and friends. That is why the wider community didn't know about it."
While prosecutors prepare for the criminal trial, the immigrants in Lowell face bleak financial futures, perhaps foreclosures or bankruptcy, Ros said. Lawyers from the SEC and US attorney's office are informing banks that the investors are crime victims, but they cannot compel lenders to give the Cambodians relief or hold off on foreclosures.
Heng and Anny Chea, who have turned their One Universe Online store into a corner grocery, are in serious financial trouble. Before they met Tan, their mortgage payments were $550 a month and their car was paid off. Now their mortgage costs $1,950 a month, and they are stuck with a Mercedes sport utility vehicle, which will cost $765 a month until their lease is up in 2007. Their credit card bills top $40,000. As they sat in their frigid corner store on a recent morning, Heng Chea whispered that he wasn't sure how much longer he could hold off his unpaid suppliers.
''We are in deep, deep trouble," he said. ''Maybe I cannot survive."
Tai Kim is back to pulling double shifts at the print shop. His mortgage payments, once $450 a month, have ballooned to $1,630. He took another equity loan to pay off his credit card debt and to help him pretend he is doing well when his ailing father comes to visit him from back home later this year. That loan costs another $479 a month, he said.
Left with his big television, the ornate table, and stinging regrets, he snaps at his children these days, he said.
''When I cannot pay, only thing is bankruptcy," he said. ''If I cry, I am sad, whatever, it won't change anything, so I enjoy what I have. I have to let it go, continue my future.
''I don't give up my dream yet," Kim added. ''Maybe I open up a restaurant."
Shelley Murphy of the Globe Staff contributed to this story. Yvonne Abraham can be reached at abraham@globe.com. 
