SEC Charges California Resident with Multimillion Dollar Ponzi Scheme Targeting Tongan American Community

The Securities and Exchange Commission (SEC) has taken legal action against Tilila Walker Sumchai, a resident of Richmond, California, for her involvement in a fraudulent securities offering that raised approximately $11.8 million from over 1,000 investors, primarily targeting members of the Tongan American community across the United States.

According to the SEC’s complaint, spanning from roughly January 2021 to October 2021, Sumchai persuaded retail investors to purchase shares in an investment she created known as “Tongi Tupe.” She did so by making false claims, asserting that she possessed a secret algorithm capable of delivering guaranteed high returns. The complaint alleges that Sumchai initially focused on well-respected Tongan American leaders, offering them substantial returns on their investments, which in turn convinced many of these leaders to endorse the legitimacy of Tongi Tupe. Subsequently, Sumchai organized gatherings hosted by these leaders, during which she promoted Tongi Tupe to other members of the Tongan American community. As per the allegations, Sumchai made promises of exceptionally high returns, including a $146,000 return within 16 weeks on a $3,000 investment. In reality, the complaint contends that Tongi Tupe failed to generate any returns; instead, Sumchai operated a Ponzi scheme that relied on funds from new investors to pay off earlier ones. Furthermore, the complaint alleges that Sumchai misappropriated investor funds for undisclosed and unauthorized purposes, including funding casino trips, travel expenses, and shopping sprees.

Monique C. Winkler, Director of the SEC’s San Francisco Regional Office, stated, “As we allege in our complaint, Sumchai sought to enrich herself by exploiting retail investors within the Tongan American community. The SEC will continue to aggressively pursue affinity frauds, which prey on the trust that members of a close-knit community have in each other.”

The SEC’s complaint, filed in the U.S. District Court for the Eastern District of California, charges Sumchai with violations of the antifraud provisions of federal securities laws. The SEC is seeking permanent injunctions, including a conduct-based injunction, disgorgement with prejudgment interest, a civil penalty, and an officer and director bar.

In response to this case, the SEC’s Office of Investor Education and Advocacy has issued an Investor Alert offering guidance on how investors can safeguard themselves against falling victim to affinity fraud.