The Securities and Exchange Commission today sued Richmond, California resident Tilila Walker Sumchai with raising approximately USD11.8 million from more than 1,000 investors through a fraudulent securities offering targeting members of the Tongan American community across the United States.

According to the SEC’s complaint, from approximately January 2021 through October 2021, Sumchai convinced retail investors to acquire shares of an investment she created called “Tongi Tupe” by falsely claiming that she would use a secret algorithm to generate guaranteed high returns.

The complaint alleges that Sumchai first targeted respected Tongan American leaders, who were paid substantial returns on their investments, which convinced many of the leaders to believe that Tongi Tupe was legitimate.

Sumchai then organised meetings hosted by these leaders at which Sumchai promoted Tongi Tupe to other members of the Tongan American community.

The SEC alleges, Sumchai promised exceedingly high returns, including a USD146,000 return in 16 weeks on a USD3,000 investment. In reality, the complaint alleges, Tongi Tupe did not generate any returns; instead, Sumchai operated a Ponzi scheme that relied on new "investments" to pay earlier investors.

Additionally, it is alleged in the complaint, Sumchai used investors' money for unauthorised and undisclosed purposes including to pay for casino trips, travel and shopping.

The SEC uses the word "charges" but this is not a criminal action. The SEC’s complaint, filed in U.S. District Court for the Eastern District of California, alleges that breached the anti-fraud provisions of the federal securities laws. The SEC seeks permanent injunctions, including a conduct-based injunction, disgorgement with pre-judgment interest, a civil penalty and a ban on her serving as an officer and director .