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The Hmong Community and Hmong Prep Rip-off: Two Degrees of Separation.

April 14, 2022

On April 13, 2022, the Securities and Exchange Commission (SEC) filed charges against Wisconsin resident, Kay Yang, for “conduct[ing] a fraudulent investment scheme targeting members of the Hmong-American communities in Wisconsin and Minnesota.” From the April 13, 2022, SEC press release:

According to the SEC’s complaint, between April 2017 and April 2021, Yang, a resident of Mequon, Wisconsin, and Xapphire LLC engaged in the unregistered offer and sale of securities issued by her entities AK Equity Group LLC and Xapphire Fund LLC. The complaint further alleges that Yang falsely represented to prospective investors, many of whom were members of the Hmong-American community in Wisconsin and Minnesota, that she would invest their money primarily through foreign exchange trading, they could expect annual returns ranging from 20% to 50%, and the trading was consistently successful. As alleged in the complaint, in reality, Yang used less than half of the investors’ money for foreign exchange trading and had many months with large net trading losses, resulting in negative returns. In addition, the complaint alleges that Yang also misappropriated approximately $4,060,000 of the investors’ money to fund her and her family’s lifestyle, including spending on casinos, travel, homes, and cars, and to repay investors in a previous venture. The SEC also named Yang’s husband, Chao Yang, as a relief defendant for improperly receiving proceeds of the fraud according the complaint.

Kay Yang

Two years prior, Yang had already been charged on the state level. In July 2020, the State of Wisconsin brought against Yang and her companies, AK Equity Group LLC, Xapphire LLC & Xapphire Fund LLC, “a Final Order by Consent to Cease and Desist, Revoking Exemptions, and Imposing Disgorgement, Restitution, and Civil Penalties” for having “violated Wis. Stat. § 551.403(1) by transacting business in this state as investment advisers without being registered under Ch. 551 as investment advisers and without being exempt from registration as investment advisers.” Among its orders to Yang, The State of Wisconsin required Yang to pay $17M in resitution over a five-year period and to surrender $4.2M in profits.

Some specifics from the 2022, federal-level, SEC charges against Yang:

Yang raised approximately $16.5 million from investors through the unregistered offer and sale of securities issued by two entities she controlled: AK Equity Group LLC and Xapphire Fund LLC. …

In both the AK Equity and Xapphire Fund offerings, Yang made a number of misrepresentations to investors, including: (a) she would use investor money “primarily” in foreign exchange trading; (b) investors would earn between 20% and 50% each year on their investments; and (c) her foreign exchange trading had been consistently successful.

Each of these representations was false. In reality, Yang used less than half of the investors’ money for foreign exchnage trading– and she consistently lost money in foreign exchange trading.

In addition, Yang diverted and misappropriated 25% of her investors’ contributions, approximately $4 million, in order to benefit herself and her family. Yang and her husband used investor money to pay personal expenses, which included gambling and cash withdrawals at casinos, real estate, extensive travel, luxury automobiles, and the repayment of certain investors from a previous venture.

From this same amount, Yang diverted at least $800,000 in investor contributions to her husband, Chao Yang, who had no right to receive these investor funds. …

… Defendants’ conduct involved fraud, deceit, and/or the deliberate or reckless disregard of regulatory requirements, and resulted in substantial investor losses. …

Yang’s investors are residents of at least eight states, and a majority of them are members of the Hmong-American communities in Wisconsin and Minnesota. Some of these investors do not speak English as a first language, and some of them were not sophisticated investors.

The April 2022 SEC charge against Yang references the 2020 Wisconsin charges and adds, “The Wisconsin Order required Yang to pay $16,950,777 in restitution to her investors, disgorge up to $4,231,998 in profits, and pay a $50,000 civil penalty. However, to date Yang has not paid the amounts she owes.” The federal case continues by noting that following the Wisconsin charges, investors wanted to withdraw their money but that “Yang has ceased all communications with most of her investors” and that she tells others they “don’t need to worry,” that she has “plenty of funds” for repayment. The SEC filing responds to Yang’s reassurances as “misrepresentations” because they are “false.”

There is another twist in Yang’s story, one that the April 13, 2022, Twin Cities Pioneer Press captures as it alludes to Yang as “having ties to a St. Paul (MN) charter school board”:

Kay Yang has been described in a separate legal matter as a “close personal friend” of Christianna Hang, founder and former superintendent of Hmong College Prep Academy, one of Minnesota’s largest charter schools.

Hang was looking to invest some of the school’s money in May 2019 when Yang referred her to Woodstock Capital LLC, a hedge fund based in London.

That fall, Hang wired Woodstock $5 million in school funds, in violation of state statutes that limit what schools may invest in. Eighteen months later, just $700,000 remained.

The school now is suing Woodstock, alleging its investment either was stolen or badly mismanaged.

Woodstock called the loss a matter of bad timing, saying the coronavirus pandemic made it “possibly the worst time in recent world history for investments such as those made by hedge funds in general.”

Hang and her husband, chief operating officer Pao Yang, resigned from the school at the end of last year with a combined $350,000 in separation payments.

No criminal or civil enforcement charges have been filed in the charter school matter.

Christianna Hang

Okay. So, here we have Hmong College Prep Academy (HCPA) school superintendent (and founder, not a board member), Hang, having conversations with a “close personal friend,” Yang, who has been operating schemes that defraud the Hmong community for years and across several states, promising to people investment returns that should be red-flag unrealistic to fellow “close personal friend” Hang, who one assumes would have heard at least something about the too-good-to-be-true high yield, AND who should have noticed to over-the-top, luxurious lifestyle of said “close personal friend” Yang. Even so, Hang had investment discussions with Yang, who seems to have spoken with another hedge fund that, in turn, contacted Hang.Consequently, charter school founder and superintendent Hang at best did not have the sense to know that Minnesota taxpayer school funding cannot legally be gambled in hedge funds (at worst, Hang hoped to get away with the scheme) AND charter school founder and superintendent Hang was singlehandedly able to transfer $5M in school money to a hedge fund, apparently without having to answer to anyone prior to making such a risky, costly decision– like having to first submit the request before the school’s board for approval or being required to have any addiitonal signature (even, say, a school attorney’s signature as proof of having sought legal counsel) in order to move such a large sum of money.


Through her foolishness, Hang lost $4.3M of the $5M of HCPA’s money.

Now, former charter school superintendent Hang– who asked the board for severance following her resignation and was deniedis suing Woodstock Capital LLC and trying to absolve herself of responsibility (though she did hand over the $5M without first bothering to investigate Minnesota’s legal restrictions for local public entities regarding public investing, which took me only minutes to locate online), stating that she “did not request or authorize Yang to seek out such investment opportunities on HCPA’s behalf” and blaming Woodstock for misleading her about the illegality of such a move. (Woodstock is not the source of the law, something a superintendent should certainly have known, and Woodstock wants the $5M that she singlehandedly could hand over of her own volition, AND Woodstock knew it would not be held responsible for market outcomes.)

Some lessons we can learn from this situation:

  • Be careful who your friends are.
  • Be careful who your advisors are.
  • No school leader should ever be the sole signator for major school spending decisions.
  • School leaders should answer to someone, and elected, not appointed, school boards are a good place to start.
  • School leaders and boards should be required to hold public meetings, especially as concerns major decisions impacting the school.
  • School leaders need to know the law.
  • School leaders should consult with school counsel regarding high-stakes spending.

I’m sure readers could add to the list. Even so, one issue is true:

Had Hang yielded to any one of the points above, Hmong Prep would likely be $4.3M richer than it is today.


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  1. Wow. Crooks working with crooks. Another day in the charter school industry.

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  1. Mercedes Schneider: Ripping Off the Hmong Community in Minnesota and Wisconsin | Diane Ravitch's blog

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